Pound Sterling is pressing August highs as firmer yield spreads and fading bearish hedges support Scotiabank’s bullish GBP/USD view.
The Pound to Dollar (GBP/USD) exchange rate is pushing back towards its August highs, trading around 1.3545 early on Monday after reaching 1.3560 last week.
Scotiabank sees a stronger underlying backdrop for Sterling than the relatively modest price move suggests.
“The pound is up 0.3% vs. the USD and threatening a break of this week’s local high in the mid-1.35s,” the bank said.
Yield spreads are helping. Scotiabank notes that UK-US spreads have extended their recent recovery, offering fresh fundamental support for GBP at the same time as demand for protection against Sterling weakness has eased.
The options market is telling a similar story.
“Risk reversals are extending their recovery and fading the premium for protection against GBP weakness,” Scotiabank said, linking the move to “a sustained improvement in the market’s perception of moderating political risk.”
That gives the latest advance a broader base than simple Dollar weakness.
GBP/USD has recovered strongly from its late-July low below 1.33, with the pair now trading above its rising 20-day moving average and close to the top of its one-month range.
Bank of England communication has also remained supportive.
Scotiabank highlighted comments from BoE Chief Economist Huw Pill which “reaffirmed a call for higher rates”, helping to keep Sterling’s rate backdrop constructive despite a relatively quiet UK data calendar.
Short-Term GBP/USD Outlook: 1.3600 Is the Next Test
Scotiabank’s technical view has turned firmly bullish.
“The RSI has climbed to a fresh local high in the lower 60s, threatening the July high,” the bank said. “The gains are suggestive of renewed bullish momentum and a potential break of the midweek high just below 1.3550.”
That level has effectively already come under pressure, with GBP/USD reaching 1.3560 during the latest advance.
Scotiabank sees additional resistance at 1.3600 and then 1.3650, while retaining a near-term trading range of 1.3480-1.3580.
GBP/USD remains well below its January high near 1.3860, but the latest recovery has carried spot above both its 20-day and 50-day moving averages and back into positive territory for 2026.
The immediate question is whether Sterling can convert improving positioning and yield support into a clean move through the mid-1.35s.
Scotiabank’s signals suggest the pressure is building.
A sustained break above 1.3550 would bring 1.3600 quickly into view, while 1.3480 marks the lower edge of the bank’s preferred near-term range.
For Pound Sterling bulls, the balance has shifted from defending 1.35 to testing how far above it the market can go.
Our currency coverage draws on live market data, official economic releases and published bank research.
