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20.08.202612:45 Forex Analysis & Reviews: GBP/USD – Analysis and Forecast: Expectations of a Bank of England Rate Hike Support the Pound

Relevance up to 06:00 2026-08-21 UTC--4

Exchange Rates 20.08.2026 analysis

GBP/USD has almost reached the 1.3660 target, supported by fundamental factors.

The U.S. dollar weakened after a sharp decline in U.S. Treasury yields to three-month lows the previous day, which had a positive impact on GBP/USD.

Exchange Rates 20.08.2026 analysis

The decline in yields resulted from intervention by the U.S. Treasury, which announced plans to at least double its purchases of long-term government bonds starting in September.

However, the FOMC's hawkish stance, which provides broader support for the dollar through expectations of higher interest rates, is helping to limit further dollar losses amid persistent geopolitical uncertainty caused by the confrontation between the United States and Iran over the Strait of Hormuz. In its latest statements, U.S. President Donald Trump said that Washington would impose stricter economic sanctions on Iran.

The British pound, by contrast, is receiving some support from UK consumer inflation data released on Wednesday, which strengthened expectations of a Bank of England rate hike of at least 25 basis points by the end of the year. This creates a positive backdrop for GBP/USD and, in the event of a possible correction, should discourage bears from taking aggressive positions.

Investors are currently focused on U.S. economic data, particularly the release of the Philadelphia Federal Reserve Manufacturing Index and the weekly report on initial jobless claims. In addition, comments from key FOMC members could support the U.S. dollar and influence GBP/USD dynamics. Moreover, upcoming geopolitical developments could contribute to increased volatility in financial markets.

From a technical perspective, GBP/USD is currently trading above all moving averages, which supports the bullish trend. The oscillators are positive, confirming the bulls' advantage. However, it is worth noting that the Relative Strength Index is close to the overbought zone, warning of a possible correction or consolidation. Overall, however, the path of least resistance remains upward.

The table below shows the percentage change in the U.S. dollar against the major currencies this week. The largest appreciation of the dollar was recorded against the Australian dollar.

Exchange Rates 20.08.2026 analysis

*A análise de mercado aqui postada destina-se a aumentar o seu conhecimento, mas não dar instruções para fazer uma negociação.

Irina Yanina,
Analytical expert of InstaSpot
© 2007-2026
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