Pound Maintains Decline Against Stronger Dollar as Fed-BoE Policy Divergence Favors Bears

GBP/USD failed to extend Friday's rebound momentum from around the 1.1335 region at the start of the new week, attracting renewed selling during early European trading. The pair is currently trading near 1.33854, edging lower on the day. The clear divergence in monetary policy paths between the Federal Reserve and the Bank of England remains the core factor weighing on the exchange rate.

**Central Bank Policy Divergence Creates Fundamental Pressure**

The Fed maintains its tightening bias, while the BoE previously voted 6-3 to hold rates steady while leaving room for potential future hikes. In comparison, the interest rate support for sterling is clearly weaker than that for the dollar, limiting any meaningful rebound in GBP/USD. Market reports indicate investors are reassessing the differences in the two central banks' subsequent policy pacing, reinforcing bearish sentiment.

**Technical Structure Remains Biased to the Downside**

From a technical perspective, GBP/USD has failed to establish sustained upside momentum since February, with each rebound stalling below the previous swing high, forming a series of progressively lower highs. Since mid-July, the pair has been trading within a clear descending channel, consistently recording lower highs and lower lows. As long as price remains capped by the upper boundary of the channel, short-term momentum is expected to stay skewed toward the downside. Should the pair break below recent lows, bears may test longer-term key support zones further down.

**Rebound Momentum Weakens, Selling Pressure Persists on Rallies**

Although buyers have repeatedly defended the lower support zone over the past few months, the strength of each rebound has gradually diminished, indicating that sterling encounters fresh selling pressure more quickly after each recovery. Unless the BoE delivers clearer hawkish signals or the Fed adopts softer rhetoric, the current structure of lower highs is unlikely to be broken. Until then, the threshold for a meaningful improvement in market sentiment remains elevated, and rebounds are more likely to be viewed as opportunities to watch for selling pressure on strength.