GBP/USD: Sterling Clocks 3-Year High Above $1.3440 as Double-Top Pattern Shapes Up

British currency took advantage of the quiet Monday and quickly gained back what it had lost last week. Can the dollar make a comeback this week? Here’s what’s happening.

💷 Sterling Smashes Three-Year High

• The GBPUSD pair advanced to a fresh three-year high of $1.3440 late Monday as the pound acted swiftly and took advantage of broad dollar weakness. The pair gained 1%, or more than 160 pips (every day traders dream, yes, especially on a sleepy Monday), and crossed into territory last seen in March 2022.
• The rarefied air of a three-year peak had traders reminiscing of the time when markets were still wrestling with the early shocks of global monetary tightening (i.e. jacked up interest rates).
• Fast forward to today, and the story is all about the softening dollar, shifting US inflation expectations, and lingering uncertainty about whether President Trump’s trade spats will really stick — or dissolve into backdoor deals.

🎯 Back on the Hunt After Historic Streak

• The glow-up in the sterling is its latest attempt to knock some more pips out of the greenback. Earlier this month, the UK currency taught a masterclass in consecutive wins with a 10-day winning streak — an accomplishment not seen in many moons.
• Now the sterling is back for more, but there is an avalanche of economic data that needs to sweep the forex space this week — and it’s mostly US-focused.

🌊 Data Deluge Incoming

• Looking ahead, the dollar will be in the spotlight. US GDP numbers drop later this week, followed by the Fed’s preferred inflation gauge (PCE) and the keenly watched nonfarm payrolls report. If those numbers come in strong, the dollar could stage a comeback. If not, analysts expect the sterling to keep pressing the advantage.
• Besides the sterling, the Japanese yen and the euro also snatched pips from the dormant buck on Monday. The EURUSD pair climbed 0.5% to $1.1420 while the USDJPY pair fell more than 1% to ¥142.00 from ¥143.89.

🗻 Double Top in the Works

• As the Tuesday session kicked off, the sterling pared back some of that Monday gain, falling under $1.34 and potentially shaping up a double-top formation with a previous peak seen in late September. If that level continues to provide resistance, the bulls vs bears battle might get extended into the next few sessions.
• A confident jump over the $1.3440 mark would expose the next bull target, sitting at $1.3650 to $1.3740. And vice versa — if the bears snatch that inflection point, the dollar might renew its push and try to get back to the major simple moving averages (SMAs) around $1.27.