GBP/USD Stuck in Tight Range Ahead of Key Central Bank Decisions
GBP/USD has been stuck in a tight range of 1.3525 to 1.3565 since Monday, as sterling has struggled to break decisively out of its 2026 range. The pair has traded a narrow band, with the pound strengthening by just 0.40% over the past month and 0.21% over the twelve months against the dollar.
The Bank of England holds Bank Rate at 3.75%, while the Federal Reserve's target range is 3.50% to 3.75%. This has effectively closed the policy spread, which was a key factor in the pair's dynamics for years. The substantial interest rate advantage the dollar enjoyed through most of the past three years has largely disappeared.
The market now assigns a 62-64% probability to a Federal Reserve increase at the September 15-16 meeting, up from roughly 45% a month ago. If that hike lands and the Bank of England holds on September 17, the dollar reclaims a 25-basis-point edge and cable loses its principal support.