The British pound held firm against the U.S. dollar on Thursday but struggled to break above the 1.2700 level, as traders hesitated near a three-month high. While the GBP/USD pair has gained support from improving risk sentiment and shifting Bank of England (BoE) expectations, renewed dollar strength has capped further advances.
A recent run of softer U.S. economic data has fueled speculation that the Federal Reserve may ease its monetary stance later this year, keeping pressure on the greenback. However, the dollar regained footing as traders positioned for key economic releases, preventing the pound from extending its rally.
Meanwhile, the outlook for the Bank of England’s interest rate policy remains uncertain. While inflation in the UK has been cooling, concerns about underlying price pressures have kept expectations of a slower rate-cut cycle alive. If the BoE signals a more cautious approach to easing, sterling could find renewed support.
GBP/USD1-D Chart as of March 04, 2025 (Source: TradingView)
Technical indicators suggest GBP/USD is facing resistance near the 1.2700 level, with bulls needing a decisive break higher to sustain the recent upside. A failure to clear this barrier could trigger profit-taking, pushing the pair back toward 1.2600 or lower if dollar strength persists.
Market participants are also closely monitoring geopolitical developments and global risk appetite. Any escalation in tensions or signs of economic weakness could drive safe-haven flows into the dollar, weighing further on the pound’s advance.
For now, GBP/USD remains in a tight range, with traders awaiting fresh catalysts. U.S. economic data and central bank signals will be crucial in determining whether sterling can break through its recent highs or if another pullback is on the horizon.
