Pound Sterling Hits Near Four-Year High Against the U.S. Dollar as Markets Watch Fed Leadership Changes

The British pound continued its upward momentum against the U.S. dollar on Thursday, briefly touching 1.3770 — its highest level since 2021. Over the past six months alone, the pound has gained nearly 10%, making it one of the standout performers in the FX market this year. While technical factors have supported the rally, growing uncertainty surrounding U.S. monetary policy has also played a key role.

According to a recent report from The Wall Street Journal, President Trump is reportedly considering announcing a replacement for Federal Reserve Chair Jerome Powell as soon as September or October. The news has unsettled markets, prompting investors to reassess the future direction of U.S. monetary policy and raising fresh doubts about the dollar’s outlook.

If those expectations materialize, the stance of the next Fed chair could become a major market driver. A nominee perceived to favor a more dovish approach — or someone seen as politically aligned with the White House — could reinforce downward pressure on the greenback. In this context, the pound, as a major currency, stands to benefit from capital reallocations and safe-haven flows.

Technically, the recent rally in GBP/USD is supported by clear bullish signals. As long as the pair holds above the 1.3675 support zone, upward momentum may extend towards 1.3825, with a potential medium-term target at 1.3965. Short-term indicators remain favorable for bulls, suggesting the uptrend still has room to run.

That said, several uncertainties remain. Beyond the question of Fed leadership, markets are also eyeing the UK economic outlook. With interest rate policy now appearing more stable, the sustainability of economic recovery in the UK will likely become a key determinant of sterling’s performance.

In sum, the pound’s recent strength isn’t just about a weak dollar. It reflects a broader convergence of capital flows, policy expectations, and supportive technicals. In the weeks ahead, markets are likely to remain focused on developments around Powell’s tenure and incoming U.S. data. While some consolidation is possible, GBP/USD looks set to stay elevated — and attractive — in the short term.