GBP/USD: Sterling Drops 1.5% After Hitting Resistance at Double Top – What’s Next?
The British pound (GBP) has experienced a sharp decline against the US dollar (USD), falling approximately 1.5% since mid-August. This drop follows the pound encountering strong resistance at a classic technical pattern known as a double top near the $1.36 level. The recent price action has traders closely watching key support and resistance levels, with market sentiment likely to be influenced by upcoming remarks from Federal Reserve Chair Jay Powell.
Sterling Encounters Resistance and Loses Ground
The GBP/USD currency pair, often referred to as “Cable,” reached a double top formation near $1.3595 around August 14. This technical pattern, which signals potential price reversal after a rally, resulted in a significant sell-off. Since hitting this resistance level, the pound has given back about 200 pips, slipping below the $1.34 mark earlier today before finding short-term support at the 100-day simple moving average (SMA).
As of Friday morning, the pair was trading around $1.3420. The question on many traders’ minds is whether this support level will hold or if the pound will experience further downward pressure in the near term.
Eyes on Powell’s Speech at Jackson Hole
One of the most anticipated events likely to sway GBP/USD’s direction this week is Federal Reserve Chair Jay Powell’s speech at the annual Jackson Hole economic symposium. This event is particularly significant as it is expected to provide crucial insight into the Fed’s future monetary policy, including possible adjustments to interest rates.
Currently, Fed funds futures suggest a 73% probability of a rate cut in September. However, Powell’s comments could either reinforce these expectations or prompt a reassessment by market participants. A hint that the Fed might delay easing could bolster the US dollar, intensifying downward pressure on the pound.
Key Levels and Market Outlook
Traders are currently focused on the immediate support zone between $1.3380 and $1.3400. A decisive break below these levels may open the door for the GBP/USD pair to trend toward the $1.3300 mark. Conversely, resistance is now defined near $1.3500 — a level that must be breached to rekindle bullish momentum.
The broader market context remains complex. The UK is grappling with persistently high inflation, while the Bank of England has taken a pause in its rate-hiking cycle. This places Cable in a precarious position, caught between inflationary pressures at home and evolving Fed policy signals abroad.
What Traders Should Watch Next
- Fed Chair Jay Powell’s Speech: Powell’s comments will be the main catalyst for volatility, potentially reshaping expectations around the Federal Reserve’s interest rate path.
- Support at 100-Day SMA: This technical level could serve as a short-term floor for the pound, but traders will want to see whether it holds amid renewed dollar strength.
- UK Economic Data and Bank of England Policy: Domestic factors including inflation readings and any signals from the Bank of England will influence the pound’s medium-term outlook.
In summary, Cable’s decline after forming a double top marks a significant technical shift. However, with a major central banking event on the horizon and ongoing economic data releases, the GBP/USD pair is poised for potential volatility. Market participants are advised to monitor key levels closely and prepare for swift market reactions to Powell’s remarks.
This article is based on the latest analysis from TradingView and market data as of August 2025.