GBP/USD: Sterling Loses Grip on 3-Year High, Slides 0.7% to Float Near $1.3450

Markets weren’t in favor of bailing it out — the sterling dipped without any known reason or cause, losing sight of the three-year peak above $1.36.

💸 Sterling Stumbles. Dollar Steps Up

• The GBPUSD pair dropped 0.7% on Tuesday to hover near $1.3450, giving up some of last week’s hard-won gains that had propelled it past a three-year high.
• The descent, which started slowly early in the morning but then accelerated into the European session, gave the US dollar a surprising boost against the lack of any economic reports or data releases. Just a wave of position unwinding and possible profit-taking as Team USA is now in London for trade talks.
• Traders had been eyeing a potential breakout past $1.36, but with no new tailwinds and broader dollar strength creeping in, momentum fizzled out.

🤫 No News Is News for Forex Bros

• Currency markets can be twitchy, and the absence of fresh data or policy chatter sometimes leaves one currency or another exposed to swift moves.
• With inflation in the UK still high and the Bank of England not exactly in cutting mode, interest rate plays may be back in focus, especially with the Fed joining the rate-hold party from the other side of the pond.
• Some analysts say the drop in the UK currency could reflect a recalibration of expectations, as traders who bet on a stronger pound now question what’s left in the tank.

👀 What’s Next for the Pound?

• For now, sterling seems content to consolidate below $1.35, but all eyes are on this week’s US macro releases — CPI, PPI, and initial jobless claims — for clues on dollar direction. On the UK side, economic data is light, meaning GBP will likely take its cues from broader risk sentiment and global headlines.
• Speaking of global headlines, Trump’s team of negotiators is now in the UK capital to potentially hammer out a deal with China (London doesn’t really have any say in the matter, it’s just meeting grounds).
• Still, the bigger trend remains intact — sterling’s up more than 9% over the past four months (back-to-back wins), and some contrarian traders are already eyeing another shot at that $1.36 breakout.