The GBP/USD currency pair is experiencing upward momentum, marking a second consecutive day of gains as the US dollar experiences notable weakness, hitting fresh lows for the year. Concerns surrounding potential tariffs and their impact on the U.S. economy have enhanced expectations that the Federal Reserve may soon initiate another round of rate cuts, which has weighed heavily on the dollar.
During recent trading sessions, the GBP/USD pair managed to break above a significant multi-week trading range, reaching its highest point since October 2024. Currently, it trades above the mid-1.3000 level, reflecting a daily increase of approximately 0.40%. This bullish trend appears to be sustainable, primarily driven by the declining value of the US dollar.
The USD Index, which measures the dollar’s strength against a selection of major currencies, has fallen sharply due to market reactions to trade policy announcements. This decline in the dollar is accompanied by falling US Treasury bond yields, indicating rising market sentiment for non-dollar assets. Conversely, the British pound is benefiting from the perception that the Bank of England will manage interest rate adjustments less aggressively than its U.S. counterpart.
From a technical standpoint, the recent upward move past the 1.3000 level confirms a breakout from previous trading patterns. Key indicators are indicating strength without yet signaling an overbought condition, supporting a positive outlook for the GBP/USD pair in the short term.
Looking ahead, there seems to be potential for further advances towards the 1.3100 mark, with possible resistance near 1.3125 and additional hurdles around 1.3155 and 1.3200. On the other hand, the 1.3000 level now serves as a protective barrier on the downside. Any correction towards 1.2955 could be seen as buying opportunities, with major support levels identified near 1.2900 and the 1.2875 – 1.2870 zone. A significant drop below this latter point may shift momentum in favor of bearish traders, bringing the critical 200-day Simple Moving Average, close to 1.2800, into play.
