Pound To Dollar Price News, Forecast: GBP Breaks Above 1.34 Resistance

The Pound to Dollar (GBP/USD) exchange rate traded around 1.3431 on Friday, extending its recovery to fresh one-year highs as Sterling continued to outperform while the US Dollar remained under pressure.

DAILY RECAP:

GBP/USD climbed for a third consecutive session, with the pair moving above 1.34 after briefly dipping below 1.3350 earlier in the week.

Sterling has continued to benefit from a combination of easing political uncertainty and expectations that the Bank of England will remain cautious over the pace of future rate cuts.

Recent UK data has been mixed, but inflation remains above target and investors continue to believe policymakers will be reluctant to ease policy aggressively.

In its latest FX briefing, ING argued that Sterling is increasingly taking its direction from domestic developments rather than simply following moves in global bond markets.

The US Dollar, meanwhile, has struggled to regain momentum.

Although the Federal Reserve minutes showed policymakers remain divided over the outlook for interest rates, investors have become less convinced that US rates will move materially higher this year. Broader risk appetite has also improved following a tentative easing in Middle East tensions, reducing demand for traditional safe-haven assets.

MUFG said in its latest market commentary that the Dollar remains vulnerable while positioning continues to unwind and investors rotate back into higher-beta currencies.

Scotiabank also highlighted that recent Dollar weakness has been driven more by changing market positioning than by any fundamental deterioration in the US economy.

With Sterling finding domestic support and the Dollar losing some of its defensive appeal, GBP/USD has reached its highest levels since last summer.

Near-Term GBP/USD Forecast: UK Activity Data and Fed Speakers in Focus

For Pound Sterling, with nothing on the calendar for Friday, attention will turn to next Tuesday’s final first-quarter UK GDP estimate, together with manufacturing production, industrial production and trade balance figures.

Investors will also be listening closely to comments from Bank of England policymakers for any fresh clues on the timing of future rate cuts.

For the US Dollar, markets will focus on Federal Reserve speakers, including policymakers due to speak after the release of the latest FOMC minutes, alongside US CPI inflation expectations and consumer sentiment updates later in the week.

Investors will also continue to monitor developments in the Middle East after the recent ceasefire reduced some of the geopolitical risk premium.

If UK economic data remains resilient while the Dollar stays under pressure, GBP/USD could extend towards “dense resistance ahead of 1.3500.”

However, stronger US data or a renewed flight to safety could pull the pair back towards 1.3300.

According to Shaun Osborne, Chief FX Strategist at Scotiabank, “the GBP’s recovery is looking even more entrenched as it stages its first meaningful attempt at breaking above recent resistance around 1.3400 and levels that roughly correspond to the 50 and 200 day MA’s.

“The offers dense resistance ahead of 1.3500.

“We note the continued recovery in the RSI, climbing to the upper 50s.

“We look to a near-term range bound between 1.3350 and 1.3450.”