The British pound strengthened for a fifth consecutive session on Monday, extending its rally against the U.S. dollar as softening U.S. data and improving risk sentiment fueled demand for sterling. The pair’s momentum reflects a broader shift away from the dollar as markets begin to price in potential changes to the Federal Reserve’s policy outlook.
GBP/USD climbed above 1.2550, building on last week’s gains as investors reassessed the likelihood of further rate hikes in the U.S. Following recent signs of easing inflation and slower labor market growth, the dollar has come under pressure, allowing currencies like the pound to recover lost ground.
GBP/USD 1-D Chart as of April 14th, 2025 (Source: TradingView)
The pound’s rally is also supported by reduced recession fears in the UK, with recent economic indicators suggesting a modest but steady recovery. Although the Bank of England has maintained a cautious tone, markets believe the central bank will keep interest rates elevated longer than the Fed, offering some support for sterling.
Investor sentiment has improved globally, lifting risk-sensitive currencies and equities. As bond yields stabilize and volatility eases, traders are increasingly comfortable taking positions in higher-yielding assets. The pound has benefited from this environment, especially as geopolitical concerns take a backseat—at least temporarily.
Despite the strong run, some analysts are urging caution. Technical resistance near 1.2600 could cap further gains unless reinforced by strong UK data or a deeper slide in the dollar. Still, the current rally suggests underlying support for the pound remains firm, especially with diverging policy expectations across major central banks.
Looking ahead, traders will be focused on this week’s U.S. retail sales and UK inflation figures, both of which could determine whether GBP/USD can sustain its upward momentum or pause after a strong five-day climb. For now, the pound remains in control, riding a wave of dollar softness and improving market sentiment.
