Pound to Dollar Faces Uphill Battle Amid Dollar Safe-Haven Demand
The Pound to Dollar exchange rate is facing a challenging week ahead as safe-haven demand for the Dollar continues to grow. After recovering some ground last week, the Pound (GBP) gave back all its August gains, leaving the pair well below the starting point of its decline. Analysts at Barclays expect the Dollar to sustain its gains, supported by the Federal Reserve's policy independence and the U.S. economy's strong performance.
The market opened the new week at 1.3235, still below a key resistance band between 1.3274 and 1.3302. The relative strength index suggests the pair has stopped falling but has not yet established a rally. The 21-day moving average, currently at 1.3363, indicates a potential for shallow rebound or consolidation.
Key levels to watch include 1.3140 as critical support and 1.3302 as resistance. A daily close above the 21-day moving average could change the outlook, but for now, analysts forecast a stall beneath 1.3302 and a return to 1.3140. The mid-August break above 1.3506 has been fully reversed, putting Sterling back within the range it traded in the first half of 2026.
This week's calendar highlights include the ISM services index on Monday and the Federal Reserve's September meeting minutes on Wednesday. Any hints of a firmer December rate hike could strengthen the Dollar further. Additionally, concerns about French public debt have sent safe-haven flows towards the Pound, but this trend could reverse if contagion spreads to German Bunds.