GBP/USD Today: Pound Holds Near Six-Month High as 1.3660 Breakout Looms

Key Takeaways

• GBP/USD traded near 1.3630 on 25 August, remaining close to its six-month high around 1.3675.
• US fiscal concerns and the Treasury’s expanded bond-buyback programme have weighed on the dollar.
• A sustained break above 1.3660 could expose 1.3700–1.3750, while 1.3600 is the first support level.

GBP/USD Holds Steady Near 1.36

GBP/USD was little changed near 1.3630 on Tuesday, leaving the pound within reach of its strongest level against the US dollar in six months.

Cable climbed as high as approximately 1.3675 last week before losing momentum. The pair has since consolidated above 1.3600 as traders assess whether the recent advance has enough support to produce a decisive breakout.

The pound has gained around 2.6% against the dollar over the past month, reflecting broad weakness in the US currency and comparatively firm UK economic data. However, GBP/USD has yet to establish a sustained foothold above the 1.3650–1.3675 resistance zone.

US Treasury Turmoil Weighs on the Dollar

Much of sterling’s recent rise has been driven by developments in the US Treasury market rather than a dramatic improvement in the UK outlook.

The 30-year Treasury yield briefly reached approximately 5.34% last week, its highest level since 2007. Rising yields would normally support the dollar, but the speed of the increase intensified concerns about US borrowing costs, federal debt sustainability and weakening demand for long-dated government bonds.

The US Treasury subsequently announced that it would at least double the maximum size of its liquidity-support buybacks for longer-dated securities. Operations covering the 10-to-30-year area of the market will increase from $2 billion to at least $4 billion each, beginning in September. The Treasury said the programme is intended to improve market liquidity.

The announcement initially pushed long-term yields lower and weakened the dollar, helping GBP/USD reach a six-month high. However, Treasury Secretary Scott Bessent later clarified that no purchases had yet been completed, limiting the follow-through from the initial market reaction.

The programme may provide temporary support for bond liquidity, but it does not remove the underlying concerns surrounding US deficits and future debt issuance. Those fiscal questions remain an important source of volatility for both Treasury yields and the US Dollar Index.

Bank of England Expectations Support Sterling

Domestic economic data have also provided support for the pound, although the UK outlook is not uniformly strong.

UK GDP expanded by 0.4% during the second quarter, while monthly output increased by 0.3% in June. Services remained the main contributor to growth, offsetting contractions in production and construction. Official GDP figures therefore indicated that the economy was slowing but had avoided stagnation.

More recent business surveys have been encouraging. The flash UK Services PMI rose to 52.8 in August from 52.1 in July, reaching a six-month high. Readings above 50 indicate expanding activity. S&P Global’s survey also showed improving confidence among service-sector companies.

The Bank of England maintained Bank Rate at 3.75% in July, but three of the nine Monetary Policy Committee members voted for an increase to 4%. That split reinforced the perception that the BoE remains concerned about inflation and may be slower to adopt a more accommodative stance. The BoE’s July decision is therefore helping to underpin sterling.

Nevertheless, the policy divergence should not be overstated. The Federal Reserve also held its target range at 3.50%–3.75% in July, with three officials preferring a quarter-point increase. The near-term direction of GBP/USD may consequently depend more on changing rate expectations and fiscal confidence than on the current difference between the two policy rates.

Can GBP/USD Break Above 1.3660?

The immediate technical focus is the 1.3650–1.3675 resistance area. A daily close above 1.3660, followed by continued buying above last week’s peak, would strengthen the case for an extension towards 1.3700.

Beyond that level, the 1.3750 region may become the next upside reference. However, repeated failures around 1.3660 would suggest that the pair remains in consolidation rather than a confirmed bullish breakout.

On the downside, 1.3600 is the first support level and has contained several recent pullbacks. A break below it could bring 1.3550 back into focus, followed by the more important psychological level at 1.3500.

Market sentiment may also influence the breakout attempt. Expanded US sanctions against Iran have increased geopolitical uncertainty, while Nvidia’s upcoming earnings could affect risk appetite across global equity and currency markets. A risk-off move could generate safe-haven demand for the dollar, even if longer-term fiscal concerns remain unresolved.