The British pound extended its gains against the US dollar on Monday, with GBPUSD climbing past $1.36 to reach a two-month high at $1.3620. The move broke above a long-standing double-top resistance, signaling strong bullish momentum as traders turn their attention to a busy week of economic updates in both the UK and the US.
The week begins with a key release from the US as August retail sales data is due Tuesday. This report will offer insights into the strength of consumer spending and could help shape expectations for the dollar’s direction ahead of the Federal Reserve’s highly anticipated policy decision. Across the Atlantic, focus will shift to UK inflation figures on Wednesday. Economists expect the Consumer Price Index (CPI) to rise 3.8% year-over-year, unchanged from July. A stronger reading could fuel speculation that the Bank of England will maintain higher rates for longer, adding further support to sterling.
The centerpiece of the week will be the Federal Reserve’s two-day policy meeting, which concludes Wednesday. Markets are pricing in the first US interest rate cut of 2025, and Fed Chair Jerome Powell’s remarks will be critical in shaping investor expectations for the path of future policy easing. While a rate cut could pressure the dollar, analysts caution that much of the move has already been priced in. This raises the risk of a “buy the rumor, sell the news” reaction, with traders taking profits on sterling gains immediately after the announcement.
With both UK and US data releases on deck, GBPUSD is poised for heightened volatility. The combination of retail sales, UK CPI, and the Fed’s decision could spark sharp intraday swings in both directions. Traders are advised to stay alert, manage risk carefully, and set stop levels as sterling continues to test fresh highs.
Technically, support lies near $1.3540, a level that previously acted as resistance, while immediate resistance is seen around $1.3680. A sustained break above this zone could open the way to further bullish momentum, but failure to hold above $1.36 risks pulling the pair back into its recent range.
