GBP/USD tests 2024 highs as momentum consolidates

GBP/USD delivered another strong performance on Monday, rallying over 1% to reach 1.3443, testing its highest levels since September 2024​. Back then, a wave of U.S. dollar strength triggered a sharp three-month decline in the pair, dragging it down to 1.21 before a recovery began at the start of this year​.

GBP/USD daily chart

Past performance is not a reliable indicator of future results.

Dollar weakness remains the driving force

The continued hawkishness of the Federal Reserve toward the end of 2024 had been a key pillar supporting the U.S. dollar, bolstered by widening FX and yield differentials​. However, President Trump’s aggressive tariff policies and a broader retreat from the "U.S. exceptionalism" narrative have reversed sentiment, pushing the dollar down to three-year lows against a basket of major currencies​.

Currency markets remain highly sensitive to tariff developments. While Trump’s recent remarks suggested progress toward a potential deal with China, cooler responses from Beijing and U.S. Treasury Secretary Bessent have tempered optimism, keeping traders cautious​.

Focus shifts to Bank of England signals

On the sterling side, attention turns to an upcoming speech by Bank of England official Dave Ramsden, scheduled for Tuesday morning​. The BoE is set to meet next Thursday, and markets are heavily pricing in a 25-basis-point rate cut, with a 97% probability currently factored into expectations​.

Traditionally, monetary easing tends to weigh on a currency by narrowing its yield advantage. However, amid heightened global uncertainty, currencies backed by policies emphasizing growth stability — such as the euro under the ECB — have been rewarded. In this context, a BoE rate cut could actually strengthen market confidence in sterling, potentially supporting a further rally in GBP/USD​

Key Technical Levels to Watch

GBP/USD weekly chart

Past performance is not a reliable indicator of future results.

For now, GBP/USD is encountering resistance at the 2024 highs. Whether bullish momentum can extend beyond this level, or a double-top formation emerges remains to be seen. Should a pullback materialize, a correction toward the 1.30 area is likely in the coming weeks​.

The weekly chart shows the Relative Strength Index (RSI) approaching overbought territory after three consecutive weeks of gains and another strong start this week​. If momentum persists, the next major resistance zone could be around 1.3645