GBP/USD: Sterling Breaks Out to Fresh 3-Year Top Near $1.36. How High Is Too High?

Sterling got a few things going for it — consumer spending was robust last month and inflation is creeping up, likely providing enough support for the no-rate-cut narrative.

📈 Sterling Rides the Momentum

• The GBPUSD pair broke out to a fresh 3-year high of $1.3592 Tuesday morning as traders piled into the pound after a week packed with sterling-friendly UK data.
• The pair was up nearly 1% on the week, before paring back some of the gains (and it’s still Tuesday, lemon). Behind the rise are back-to-back economic surprises, including a retail sales print that smacked expectations in the face and an inflation report that showed price pressures gaining steam.
• Technical traders should note the pair has now cleared key resistance around $1.3550 — opening the door to $1.3650 and possibly beyond, if momentum holds.

😎 Rate Cut? Not So Fast

• The Bank of England is now seen as less likely to cut interest rates anytime soon. Why? A 3.5% inflation reading and robust consumer demand paint a picture of an economy that doesn’t need stimulus — at least not yet.
• Markets are now pricing in just a 15% chance of a BoE cut in the next meeting (happening June 19), down from nearly 50% a few weeks ago, according to futures data.
• Several BoE policymakers signaled they want to see “more sustained disinflation” before pulling the trigger — a subtle shift that traders didn’t miss. Higher rates keep the pound well-bid as yields stay high, too.

🤔 Pound Has a Tailwind — But for How Long?

• Analysts say sterling still has room to run, especially if US data weakens and the dollar continues to drift. But the $1.36 handle could act as stiff resistance — a level last touched in mid-February 2022.
• Short-term focus now shifts to next week’s PCE inflation and Fed speak, which could swing dollar sentiment and determine whether the pound continues to climb or finally takes a breather.
• Forex bros should remain cautious around the next BoE move — unless central bankers surprise with a hawkish tone, the pound may struggle to push far beyond $1.3650 without a fresh catalyst.