GBP/USD Stalls at Six-Month High as Dollar Weakness Pauses

The British pound (GBP) continued its upward trend against the US dollar (USD), reaching a six-month high of 1.3675 on August 19. This move was driven by a sharp decline in long-term US yields, which undermined demand for the dollar.

However, the pair's advance has stalled, and it is now waiting for a catalyst to break through the resistance at 1.3675 or retrace to 1.3570.

The UK Treasury's announcement of doubling liquidity-support buyback operations in the 10-year to 20-year sector on August 19 played a significant role in the move. The operation lifted the maximum from $2 billion per session to at least $4 billion, effective September 9 and running through November 4.

The Treasury's decision was seen as a statement of intent or an admission that the tool was inadequate, with estimates suggesting genuinely deployable TGA funds range from $100 billion to $200 billion against a federal debt stock that topped $40 trillion this year.