Sterling Hits One-Month High on Strong Data

Pound-Dollar Exchange Rate in Economic Focus

The British pound rose sharply, approaching the $1.3400 level, briefly breaking above 1.3400 yesterday—its highest level in a month against the U.S. dollar—as stronger-than-expected U.K. economic data bolstered expectations that the Bank of England will raise interest rates next month.

The UK inflation rate rose to 3.5% in September—its highest level since October 2025—exceeding expectations of 3.4%, driven by auto fuel prices.

Core inflation and services sector inflation also came in higher than expected. Public sector net borrowing totaled 24.5 billion pounds, a figure higher than expected, ahead of next week’s budget announcement.

This data follows signs of economic resilience, including an unexpected drop in unemployment, 0.1% GDP growth in August, and a narrowing trade deficit.

Markets are now fully pricing in the possibility of a 25-basis-point hike in the base interest rate in November.

To date, the Bank of England remains the only major central bank that has not yet begun a cycle of monetary policy tightening.

However, recent remarks by Governor Andrew Bailey in which he noted that a prolonged war could increase pressure on policymakers to take action suggest that an interest rate hike may be very close.

GBP/USD from a Technical Perspective

The GBP/USD pair is trading within a downward price channel on the daily chart, and the pair rose strongly today, posting gains for the second consecutive week, climbing from its lows near 1.3150 after completing the Shark harmonic pattern, as we predicted in our weekly analysis video here

We continue to expect further gains toward the 1.3470 resistance level, followed by the 1.3600 level near the upper boundary of the downward price channel.

Any corrective pullback near the 1.3320/30 levels is expected to present a good opportunity to re-establish long positions.

This scenario would be invalidated if the pair breaks below 1.3270.