The British pound advanced for a second straight session on Monday, with GBP/USD rising 0.2% to reclaim the 1.3400 level. The move comes after the pair touched seven-week lows last Thursday, weighed down by a dominant U.S. dollar.
Sterling’s rebound reflects fading dollar momentum as markets reassess the Federal Reserve’s path and await fresh U.S. economic data. However, technical hurdles remain. The 50-day Exponential Moving Average (EMA) near 1.3480 is acting as immediate resistance, while the 1.3500 mark is emerging as another critical barrier for buyers.
Market participants now turn to Tuesday’s release of final Q2 UK GDP figures, which are expected to show growth of 0.3% quarter-on-quarter and 1.2% year-on-year. Although revisions are typically modest, any significant deviation could quickly alter sentiment around the pound.
U.S. Risks Add to Market Uncertainty
The U.S. dollar’s recent retreat has offered breathing space for GBP/USD, but political risks in Washington continue to cloud the outlook. A potential U.S. government shutdown could delay the release of the closely watched nonfarm payrolls (NFP) report, a key data point for Fed policymakers.
President Donald Trump has threatened to cut thousands of federal jobs if lawmakers fail to approve funding, raising concerns about economic disruption and reduced investor confidence. With the dollar already under pressure from shifting rate expectations, political turmoil could further exacerbate volatility across major currency pairs.
Key drivers for GBP/USD in the week ahead include:
- UK Q2 GDP expected at 0.3% QoQ, 1.2% YoY
- U.S. nonfarm payrolls at risk of delay
- Resistance at 1.3480 (50-day EMA) and 1.3500 handle
- Market sentiment tied to Fed policy expectations
Outlook for Pound Traders
For now, GBP/USD is attempting to stabilize above the 1.3400 threshold, but bullish momentum remains fragile. A confirmed break above the 1.3480–1.3500 resistance zone would improve near-term technical prospects. Conversely, failure to hold 1.34 could expose the pair to renewed downside, with the 1.3350 level offering initial support.
Traders remain cautious as a combination of UK economic data and U.S. political developments will likely set the tone for the pound in coming sessions. The interplay between fading dollar strength, upcoming UK GDP results, and potential disruptions from Washington will define whether this recovery can extend further or stall at resistance levels.