Pound Sterling (GBP) remains steady in the upper 1.35s following UK data releases. The June and second-quarter GDP figures surpassed expectations at +0.4% and +0.3% respectively, showing stronger than predicted activity in manufacturing and services.
The UK economy led the G7 in the first half of the year with a 1.1% growth, nearly double the US’s 0.6% increase. This growth has slightly reduced expectations of easing from the Bank of England for the remainder of the year.
Sterling’s Bullish Momentum
Sterling is firm, approaching resistance at 1.3590, with a bullish trend from the August 1 low supported by momentum on the 6-hour chart. Breaking through 1.3590 could lead to gains targeting 1.3635/45 and the July 1 high at 1.3790, with support at 1.3530/40.
This information includes forward-looking statements with potential risks and uncertainties. All risks, losses, and costs associated with investing, including total principal loss, are the reader’s responsibility. No stock positions or business relationships related to this content are held by the author.
We are seeing Pound Sterling hold firm because the UK economy is performing much better than expected. The recent Gross Domestic Product figures for June and the second quarter showed the UK leading G7 growth, surprising many who anticipated a slowdown. This unexpected strength makes it very unlikely that the Bank of England will cut interest rates in the coming months.
This outlook is supported by the latest inflation data from July 2025, which showed the Consumer Price Index remaining stubbornly at 2.3%, still above the Bank’s 2% target. Looking back, this resilience is a significant turnaround from the economic anxieties we saw throughout 2023 and 2024. The Bank’s recent statements have emphasized a data-dependent approach, and the current data gives them no reason to ease policy.
Economic Divergence
In contrast, recent data from the United States, including a softer-than-expected jobs report for July 2025, suggests their economy may be cooling faster. This growing divergence between the UK and US economic paths is creating a favorable environment for Sterling against the dollar. This is a very different picture from early 2024, when the Federal Reserve was seen as having a much more aggressive stance.
Given this, we see opportunities in bullish derivative strategies on the pound for the next few weeks. We are watching for a sustained break above the 1.3590 resistance level, which could open the door for a move towards 1.3790. Buying GBP/USD call options with strike prices around 1.3650 for September or October expirations seems like a reasonable way to position for this potential upside.
Of course, we must manage the risk if this momentum fades. The 1.3530/40 level now acts as critical support, and a drop below it would signal that the bullish trend is weakening. Traders could consider using this level as a trigger for stop-losses or for buying protective put options to hedge their long exposure.
