Sterling Hits a Fresh 2026 High Near 1.3675: Can the Pound Keep Climbing?
Somewhat lost in all the yen drama, the British pound has been quietly having an excellent summer.
GBP/USD touched 1.3675 on Wednesday, its highest level of 2026, before settling back around 1.3550. From the late-June low of 1.3143, that’s a rally of more than 4% in under two months. For a major currency pair, that’s a serious move.
Why the pound is winning
The straightforward answer: relative rates. The Bank of England has held its policy stance firmer than markets expected this summer, while rate expectations elsewhere — particularly for the Fed — have softened. A currency is, at heart, a reflection of what its central bank pays you to hold it, and right now sterling is paying more than the alternatives.
The euro has also been recovering — up from 1.1380 in early July to about 1.1620 — so part of this is a broadly softer dollar. But sterling has outpaced the euro convincingly: EUR/GBP has fallen from 0.8640 to 0.8580 over the same window, a clean signal that pound strength is idiosyncratic, not just dollar weakness.
The case for caution
Here’s what worries me about chasing this move. The UK’s economic data hasn’t been uniformly strong — growth is still sluggish, and the BoE’s own forecasts remain cautious. A rally built mostly on rate differentials can reverse fast if one soft inflation print shifts the rate path. We’ve seen that movie before, in 2023, when a similar sterling rally gave back nearly everything in six weeks.
Technically, 1.3700 is the obvious resistance zone — a level that capped the pair back in early 2025. If GBP/USD can close above it on a weekly basis, the path to 1.40 opens up. If it fails again, expect a retracement toward 1.3300 where the August consolidation began.
Great trade so far. Just don’t confuse a good trade with a low-risk one.
Disclaimer: This is market commentary, not investment advice. FX trading carries substantial risk of loss.
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