The Ethereum NewsBritish Pound has broken through 1.3660 against the US Dollar, marking its strongest position since early 2022.
Broad-based US Dollar weakness continues to provide tailwinds for Sterling bulls.
Market participants await crucial GDP prints from both economies later this week.
The currency pair extended its upward trajectory for the third consecutive session as the Greenback struggles to find footing across major currency pairs. This sustained move comes amid a flurry of central bank commentary from both sides of the Atlantic, with more scheduled appearances expected to influence market sentiment.
Federal Reserve Chairman Jerome Powell concluded his semi-annual testimony before Congress, maintaining the central bank's cautious approach. The Fed chief reiterated their data-dependent stance, emphasizing the need for more evidence before considering any policy adjustments. Market participants noted Powell's comments about ongoing economic uncertainties stemming from recent trade policy developments.
Attention now turns to Bank of England Governor Andrew Bailey's scheduled address at an important business conference. His remarks at the event titled 'Where's the growth?' could provide crucial insights into the UK central bank's thinking ahead of Friday's GDP release. Economists anticipate the UK economy expanded by 0.7% quarter-over-quarter in Q1.
Before the UK figures, markets will digest the preliminary US GDP reading on Thursday. Consensus estimates suggest the world's largest economy contracted slightly at an annualized rate of 0.2% last quarter, potentially signaling the beginning of a broader slowdown.
Technical Outlook for GBP/USD
The currency pair's remarkable ascent shows no signs of slowing, with Wednesday's session marking fresh multi-year peaks. This continuation pattern suggests Sterling could be headed for its fifth consecutive monthly gain against the weakening Dollar.
However, some technical indicators suggest the rally may be becoming overextended. The pair currently trades significantly above its 200-day moving average near 1.3020, while momentum oscillators remain firmly in overbought territory. These conditions typically precede periods of consolidation or corrective moves.
Market Sentiment and Positioning
Recent Commitment of Traders reports reveal growing bullish positioning in Sterling futures, though some analysts warn the crowded trade could become vulnerable to sharp reversals. The current risk-reward profile suggests traders should exercise caution when entering new long positions at these elevated levels.
Key support levels to watch include the psychological 1.3600 handle, followed by the recent swing low around 1.3500. On the upside, resistance appears sparse until the 1.3750 area, which represents the next major psychological barrier.
