As the GBP/USD chart shows, the pound rose above 1.3560 today — its highest level since September 2025.
The pound’s strength may be driven by expectations of a tighter monetary policy from the Bank of England in 2026, which seems reasonable given that inflation has remained above 3% since April 2025.
At the same time, market participants may be concerned about the implications of US actions in Venezuela, prompting a shift of capital into other currencies and contributing to dollar weakness.
GBP/USD Technical Analysis
In December, GBP/USD formed an ascending channel (shown in blue), which remains relevant in January:
It appears that the decline at the end of December, which formed a resistance trendline (shown in red), has ended, and bulls successfully resumed the uptrend by finding support at the lower boundary of the channel.
However, attention should be paid to the RSI on the GBP/USD chart: a bearish divergence is visible between peaks B and C, which can be interpreted as a potential slowdown in the uptrend. On this basis, the market may be vulnerable to a correction. In such a scenario, GBP/USD could fall towards 1.3505, which may act as support given the strength of buyers at this level during the break of the resistance line and the channel’s median.
