GBP/USD continues to rise, but time is running out

• GBP/USD hit another 30-month high on Monday.
• Sterling could run out of steam despite Greenback weakness.
• The UK could be heading for a rapid turnaround in economic conditions as the British Prime Minister considers fiscal changes.

GBP/USD found its way into another 30-month high to start the new week of trading, pulling deeper into bull country amid broad-market greenback selling pressure. The Federal Reserve’s (Fed) last-minute plunge into a double interest rate cut last week triggered a weak position in dollar flows, helping to push the GBP into the lead.

Markets will relax on Tuesday with little of note from the UK. On the US economic calendar, it is strictly a mid-level event, although investors will be watching for comments from Fed Governor Michelle Bowman during the US market session.

Political threats loom just over the horizon for sterling; British Prime Minister Keir Starmer has mused aloud that Britain’s domestic economy could be on a collision course with the “painful” economic reforms that are needed, particularly with UK inflation figures proving much stickier than in other countries.

September’s S&P US Manufacturing PMI fell to 47.0 for the month, falling to its lowest level since July 2023, as the US manufacturing sector sees a continued gloomy outlook for business activity. On the other hand, the S&P US Services PMI fell to 55.4 in September, down from August’s 55.7 but beating the expected print of 55.2.

Fed policymaker and Chicago Fed President Austan Goolsbee hit markets with tepid comments early Monday, noting that a much bigger rate move from the Fed may be needed. The Fed official pointed out that the Fed may need to pull much lower on policy rates to keep business lending conditions liquid enough to keep the US business landscape keeling over as the record tightening of in the US labor market is drying up.

GBP/USD price

Despite hitting a new consecutive 30-month high on Monday, cable bidders struggled to push price action deeper into bull country, and markets will enter the midweek market sessions with prices oscillating without a noticeable lack of technical support. A firm bullish trend is still contained in daily candlesticks, with the pair climbing above the 50-day exponential moving average (EMA) near 1.3000.

GBP/USD Daily Chart