Fading Fed rate hike expectations and softer US economic data weigh on the USD, lifting the GBP/USD pair above 1.3500.
The GBP/USD pair climbed above mid-1.3500s in early Asian trading, nearing a three-month peak as the USD faced selling pressure. Weak US inflation and retail sales data released last week reinforced expectations that the Federal Reserve may pause rate hikes, undermining the greenback’s strength.
US retail sales fell 0.6% in July, the largest monthly decline since May 2023, signaling a slowdown in consumer spending. Meanwhile, UK GDP growth of 0.3% in June and 0.4% in Q2 bolstered the case for potential Bank of England rate hikes in 2026, supporting the pound’s resilience.
Analysts noted the GBP has been the best-performing major currency in August, driven by diverging monetary policy outlooks between the Fed and BoE.