For currency traders and global investors, the British pound’s recent journey has been anything but dull. Over the past week, the GBP/USD exchange rate—often referred to as ‘Cable’ in the financial world—has moved through a narrow and tense corridor, reflecting both technical uncertainty and the weighty expectations of upcoming economic data. On August 19, 2025, the pair hovered above the 1.3500 mark, briefly dipping below to its lowest point in a week before staging a modest rebound. This back-and-forth dance comes as the market digests a slew of technical signals, central bank maneuvers, and shifting geopolitical winds.
According to analysis from StoneX, the GBP/USD pair’s recent recovery above its 50-day simple moving average (SMA) at 1.3502 has helped soothe fears of a looming head-and-shoulders formation—a classic technical pattern that often signals a reversal. Earlier in the week, the pair even managed to notch a fresh monthly high at 1.3595, suggesting buyers hadn’t completely lost their nerve. Yet, as FXStreet notes, the technical outlook remains hesitant. The four-hour chart’s Relative Strength Index (RSI) sits just below 50, indicating that bullish momentum is lukewarm at best. In short, traders appear reluctant to bet big on a sustained rally, at least for now.
Why the caution? A closer look at the macroeconomic backdrop reveals several reasons for the market’s measured approach. First, the UK’s Consumer Price Index (CPI) for July is set to be released by the Office for National Statistics on August 20, 2025. Expectations are for the headline inflation rate to tick up to 3.7% year-over-year, a modest rise from June’s 3.6%. This seemingly small change carries outsized importance, as it will likely influence the Bank of England’s (BoE) next moves on interest rates. After all, the BoE’s primary mandate is price stability, and it has a well-known preference for keeping inflation near the 2% target.
The central bank’s most recent meeting in August ended with a razor-thin 5-4 vote in favor of a 25 basis point rate cut. This split decision underscores the deep divisions among policymakers about how aggressively to support the economy versus reining in persistent price pressures. As StoneX points out, “a gradual and careful approach to the further withdrawal of monetary policy restraint remains appropriate,” according to the BoE’s own assessment. In plainer terms, the bank isn’t in a rush to lower rates further unless inflation shows clear signs of cooling.
This context helps explain why the pound has struggled to break out decisively in either direction. If the upcoming CPI data comes in softer than expected, it could ratchet up pressure on BoE Governor Andrew Bailey and his colleagues to consider more rate cuts—potentially weakening the pound further. On the flip side, persistent or hotter-than-forecast inflation might force the bank to hold rates steady or even consider tightening again, lending the currency some support.
Technical traders, meanwhile, are keeping a close eye on several key support and resistance levels. The 1.3500 mark—aligned with both the 50-day SMA and a psychologically important round number—serves as the first major support. Below that, the 1.3460 level, which corresponds to the 50% Fibonacci retracement of the latest downtrend and the 200-period SMA, offers another cushion. Should bearish momentum intensify, the next levels to watch are 1.3410 and 1.3400, with the monthly low sitting at 1.3142. A breach below 1.3140-1.3150 could open the door to further declines toward 1.3010, according to StoneX.
On the resistance side, the 1.3540 level (Fibonacci 61.8% retracement) is the first hurdle. From there, the 1.3590-1.3600 zone—another round number and static level—comes into play, followed by the 1.3640 mark (Fibonacci 78.6% retracement). Should GBP/USD manage to break above these, a move toward the July high of 1.3789 isn’t out of the question, and some analysts even have their sights set on the September 2021 high at 1.3913 as a longer-term target.
It’s not just technicals and central bank policy weighing on the pound. The broader currency market has also been shaped by shifting risk sentiment, driven in part by geopolitical developments. Earlier in the week, renewed strength in the US dollar—often seen as a safe haven during periods of uncertainty—dragged GBP/USD lower. That move was tempered, however, by easing tensions between the United States and Ukraine. Headlines from a meeting between US President Donald Trump and Ukrainian President Volodymyr Zelenskyy indicated progress, with US Secretary of State Marco Rubio affirming cooperation with European and non-European allies on security guarantees for Ukraine. President Zelenskyy’s openness to meeting with Russian President Vladimir Putin further helped calm nerves, limiting the dollar’s gains and allowing the pound to recover some lost ground.
Looking at the bigger picture, the pound’s performance against other major currencies has been mixed. Over the past week, it was notably the weakest against the Swiss franc, according to FXStreet’s currency heat map. This relative underperformance underscores the pound’s vulnerability in the current environment, where even minor shifts in sentiment or data can trigger outsized moves.
For those new to the world of foreign exchange, it’s worth remembering that the pound sterling is the oldest currency still in use, dating back to 886 AD. It’s also the fourth most traded currency globally, accounting for 12% of all FX transactions—about $630 billion a day as of 2022. The GBP/USD pair alone makes up 11% of global FX trading, a testament to its enduring importance. The Bank of England, which issues the pound, wields significant influence over its value, primarily through interest rate adjustments. Higher rates tend to attract foreign capital, boosting the pound, while lower rates can have the opposite effect.
Economic data releases—such as GDP, manufacturing and services PMIs, and employment figures—also play a crucial role in shaping the pound’s trajectory. A strong economy typically supports the currency, as it may prompt the BoE to tighten policy. Conversely, weak data can lead to a softer pound. Trade balance figures, reflecting the gap between exports and imports, are another key factor: a positive balance tends to strengthen the currency, while a negative one can weigh it down.
With all eyes now on the UK’s upcoming inflation report, traders and investors are bracing for another potentially volatile chapter in the pound’s story. Whether GBP/USD will break out of its current range or remain mired in uncertainty will likely hinge on the interplay between inflation, central bank policy, and the ever-present specter of geopolitical risk. For now, the only certainty is that the market remains on edge, watching every data point and headline for clues about what comes next.
As the week unfolds, the pound’s fate hangs in the balance—poised between technical thresholds, central bank caution, and the unpredictable tides of global events.
