Sterling’s Summer Strength: GBP/USD Eyes 1.35 Again
The pound keeps ruining the bears’ summer.
GBP/USD pushed to 1.343 this week, extending a recovery that has carried sterling from 1.3143 in late June to within striking distance of the 1.35 handle it last touched in May. Against a surging dollar, that’s an achievement — and against the euro, it’s a rout, with EUR/GBP sliding to fresh 2026 lows near 0.8490.
Why sterling keeps winning the relative game
The Bank of England’s rate stance remains the highest in the G10, and UK inflation data this week did nothing to challenge it. While the ECB drifts toward easing talk and the Fed sits comfortably on hold, the BoE’s “higher for as long as it takes” posture makes sterling the carry community’s favorite funding alternative to the dollar. Flows follow yield, and the yield is in London.
There’s a second, quieter driver: positioning. Speculators were heavily short sterling into June, and the squeeze from 1.3143 has been as much about those shorts capitulating as new longs arriving. Squeezes fade when they’re done — which makes the upcoming UK data unusually important.
What’s next
1.3500 is the technical and psychological gate. Above it, the June high at 1.3545 and then 1.3600 come into play. Below, 1.3324 (this week’s low) protects the range; a break there signals the squeeze is over and sterling rejoins the euro in the dollar’s meat grinder.
Sterling remains a “least-bad” story, not a great one. Trade it as such: respect the momentum, respect the calendar, and don’t confuse a squeeze with a sea change.
Disclaimer: This is market commentary, not investment advice. Trading FX, commodities, equities and crypto carries substantial risk of loss.
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