The GBP/USD currency pair has been incredibly strong, continuing to build upside momentum on Thursday for the second day in a row. This positive trend has propelled the currency pair to its highest value since October 2024 during the Asian trading session. Here’s what’s driving the new wave. In particular, the direction of the US Dollar Index (DXY) and changing sentiments regarding Fed policy stance are critical drivers.
With an even a lower close on the DXY, the US dollar has made a new year-to-date low. We attribute this decline overall to US President Donald Trump’s trade tariffs, which have affected the US dollar overall. This long USD trend should have caused extremely disruptive currency trading dynamics. Analysts are betting that the Federal Reserve will soon be the first major central bank to restart its rate-cutting cycle. This latest move would further decrease the attractiveness of the US dollar.
The dollar has fallen to a new year-to-date low. This worsening comes at a time of declining US bond yields and increasing hopes for more Fed rate cuts. So to say the precious metals market is booming in this climate is an understatement. The dollar’s weakness is drawing investors to gold and other commodities.
The GBP/USD pair continues to take advantage of the weakness of the USD. On top of that, President Trump’s tariffs increase its value by slapping us with higher costs. These tariffs have set a shockwave into motion that is crashing the valuation of the US dollar. In response, the British pound is becoming stronger. The duo’s return on investment is already looking good. This means that it remains very much the possible case for furthering the uptrend that began from the January monthly swing low.
Now trading a little above the mid-1.3000s, the GBP/USD pair is 0.40% higher on the day. Financial analysts have drawn attention to the fact that this 1.3000 psychological barrier acts as an essential resistance level for this currency pair. If the price breaks above this resistance milestone, it will indicate a definitive move out of the multi-week trading range. If so, that would mean larger benefits are to come in future years.
The 1.3000 resistance breakpoint bears critical importance in protecting the immediate downside for the GBP/USD pair. The breadth of its significance just might be. If the duo manages to do that, it might bring some bullish spirit back to traders. Oscillators on the daily chart are now set up deep in the positive territory, suggesting that the pair enjoys persistent strength on this time frame.
The technical indicators support a bullish sentiment towards the GBP/USD pair in the coming days. This indicates that the pair is poised to increase even more, even though bearish sentiment continues to weigh on the greenback. While market participants take stock of these trends, they are cautiously optimistic about possible bullish moves yet to come.