Sterling Slips Below 1.3200 as Fed Hike Bets Outweigh Political GBP/USDTASTYFX:GBPUSDtastyfxGBP/USD traded lower on Tuesday, slipping around 0.5% to trade back under 1.3200, a level that has come to define the floor of the pair's 2026 range. Sterling first tested this area last Thursday in the immediate fallout from the FOMC and Bank of England decisions, but it found its footing over the following sessions, bouncing on both Friday and Monday before today's renewed selling. The move owes largely to a firmer U.S. Dollar, with the USD drawing support from an aggressive repricing of the Federal Reserve's policy path. Notably, the pound's lack of standout moves on the crosses (little changed against the Euro, firmer against the Aussie, softer against the Yen) is exactly what a risk-off backdrop would produce, reinforcing that today is a dollar and risk story rather than anything sterling-specific. That repricing has been the week's dominant force. Last week's FOMC, compounded by fresh tech-driven jitters across risk assets in recent sessions, has nudged markets toward pricing in one or more Fed rate hikes before year-end, a shift squeezing bond markets and lifting the cost of capital, both dollar-supportive. On the U.K. side, Prime Minister Keir Starmer's surprise resignation initially weighed on the pound, only for the reaction to reverse as markets coalesced around expectations that Andy Burnham would assume the leadership uncontested. The prospect of an orderly handover rather than the turmoil some had feared, paired with optimism over steadier governance, has tempered the domestic risk premium. Attention now shifts to Thursday's PCE inflation report as the key test: a hotter print would validate the hawkish Fed narrative and extend the dollar's bid, while a cooler reading could reopen the path for risk assets, Sterling included, to recover. In the above chart, GBP/USD is back to pressing 1.3200, the level that increasingly looks like the floor of the broader 2026 range. Until last week, price action had the look of a consolidating triangle, drawn off the early-April lows and the May highs near 1.3600, with the pair chopping around 1.3400, but last week's break lower has reframed that structure as a test of the range bottom rather than a coil within it. The early-April lows, which double as the year-to-date lows, held firm on their brief test then and are doing the heavy lifting again now, having absorbed Thursday's initial probe before Friday's and Monday's bounces. A decisive close below 1.3200 would turn attention toward the November 2025 low near 1.3000 as the next downside reference; until then, the repeated defenses of recent sessions keep the range intact.