GBP/USD Trends Higher, Fresh High Since Feb 2022
The GBP/USD pair was seen building on last week’s strong up-move and gained some follow-through positive traction during the Asian session on Monday (05/26). The momentum lifted the spot price beyond the 1.3550 level, to the highest level since Feb 2022, and was sponsored by a combination of factors.
The British pound (GBP) continued its relative outperformance on the back of upbeat UK Retail Sales figures released on Friday, which showed that consumer spending remained a bright spot despite the gloomy economic outlook. This, along with higher-than-expected inflation in April, fueled speculations that the Bank of England (BoE) will pause at its next meeting on June 18 and take its time before lowering borrowing costs further.
The US dollar (USD), on the other hand, continued to struggle to attract any meaningful buyers amid concerns that the tax and spending bill will widen the US budget deficit at a faster pace than previously expected. Moreover, the growing acceptance that the Federal Reserve (Fed) will cut interest rates further in 2025 dragged the USD to a near one-month low and further contributed to the GBP/USD pair’s positive move.
Moving forward, investors this week will face a slew of important US macro data releases – starting with Durable Goods Orders on Tuesday, followed by Preliminary GDP data on Thursday. These, along with the FOMC meeting minutes on Wednesday and the US Personal Consumption Expenditures (PCE) Price Index on Friday, might provide cues on the Fed’s rate cut path, which would influence the USD and the GBP/USD pair.
Source: FXStreet
