The British pound regained ground against the U.S. dollar, with GBP/USD rising above the 1.2600 mark, as a softer greenback provided modest support. The pair’s advance reflects a broad pullback in the U.S. dollar, driven by shifting expectations around Federal Reserve policy and mixed economic data.
Despite the rebound, the upside for GBP/USD appears limited, as investors remain cautious ahead of key economic releases. While the dollar’s weakness has offered near-term relief, uncertainty over future rate decisions by the Federal Reserve and the Bank of England continues to weigh on sentiment. Markets are closely watching U.S. labor market data and inflation indicators for further clues on the Fed’s next move.
Meanwhile, the pound’s gains have been tempered by concerns over the UK’s economic outlook. Sluggish growth and persistent inflation challenges have kept the Bank of England in a difficult position, with policymakers balancing the need for stability against the risk of prolonged stagnation. The central bank’s cautious stance has left GBP/USD vulnerable to renewed downside pressure.
From a technical perspective, 1.2650 remains a key resistance level, with a break above potentially opening the door to further gains. However, failure to maintain momentum could see the pair retreat toward 1.2550, where buyers may look to defend support.
Short-term movements in GBP/USD will likely hinge on upcoming U.S. data releases and shifts in global risk sentiment. For now, the pair is holding above 1.2600, but without a strong catalyst, upside potential may remain capped.
