GBP/USD Outlook: Sterling Holds Firm Near 1.2930 as Dollar Softens Ahead of PMI Data and Bailey Speech

Key Highlights:

• GBP/USD rebounds near 1.2930 as fresh USD weakness offers support.
• Divergent Fed-BoE policy paths and breakout above 200-day SMA support a bullish setup.
• Focus shifts to UK/US flash PMI releases and BoE Governor Bailey’s remarks for next cues.

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Pound Recovers Ground on Weaker Dollar Sentiment

The British Pound regained modest ground against the U.S. Dollar on Monday, with the GBP/USD pair climbing to around 1.2930, marking a 0.10% daily gain and bouncing back from last week’s decline to 1.2850. The move reflects fresh selling pressure on the U.S. Dollar amid fading optimism around the Fed’s hawkish stance.

The U.S. Dollar Index (DXY) has stalled its three-day rebound from multi-month lows. While the Fed recently raised its inflation outlook, markets remain skeptical that sustained price pressures or tariffs will deter the central bank from cutting rates later this year. Traders are increasingly factoring in the likelihood of a tariff-driven slowdown in the U.S. economy, which is dampening demand for the safe-haven dollar.

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Sterling Supported by BoE’s Hawkish Tilt

The Bank of England’s hawkish rhetoric continues to provide a cushion for the Pound. The BoE has pushed back against market expectations for aggressive rate cuts and upgraded its inflation peak forecast, reinforcing the view that it may maintain higher rates longer than its counterparts, including the Fed.

Adding to the bullish sentiment is the technical breakout above the 200-day Simple Moving Average (SMA) last week — a development not seen since November — signaling strong underlying demand for the Pound.

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Data Watch: PMI Reports and Central Bank Speeches in Focus

Looking ahead, traders will closely monitor the flash PMI surveys from both the UK and the U.S., which are expected to provide insight into the strength of each economy’s services and manufacturing sectors.

Speeches from FOMC officials, along with comments from BoE Governor Andrew Bailey, are also on the docket and could spark short-term volatility. Bailey’s tone will be critical in confirming whether the central bank maintains its cautious stance amid slowing inflation but lingering growth concerns.

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Technical Picture: GBP/USD Positioned for Further Upside

With prices stabilizing above the 1.2900 handle and the pair trading just shy of its highest levels since November, the broader setup remains supportive for Sterling. If bullish momentum continues, a move toward 1.2980 and eventually 1.3050 could be on the cards. On the downside, immediate support lies near 1.2860, followed by the key 200-day SMA around 1.2800.

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📊 Key Events Ahead

• UK & US Flash PMIs
• BoE Governor Bailey Speech
• FOMC Member Speeches

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