GBP/USD Slips Below 1.36 as Hawkish Fed Narrative Takes Hold

The British pound has been vulnerable to a near-term decline as it consolidates below 1.36, with bulls scaling back their long positions ahead of the end-of-summer holidays and adjusting to a more hawkish Federal Reserve narrative.

Following Chair Kevin Warsh's speech at Jackson Hole, which was seen as hawkish and pushing rate expectations higher, sterling bulls have been left in a precarious position.

The Fed's shift towards a more aggressive monetary policy has weighed on the pound, with some market analysts suggesting that the U.S. central bank and the Bank of England will stay on parallel paths through 2026.

Short-term futures also indicate that U.S.-UK rates are converging, which could stall GBP/USD gains in the near term.