GBP/USD price rallies to 7-month high on BoE rate outlook and dollar weakness
British pound extends rally to 7-month high as BoE rate bets lift GBP/USD above $1.34
The British pound extended its winning streak into a ninth straight session on Monday, rising past $1.34 for the first time since September 2024. The pair was last seen trading near $1.3414, up 0.88% on the day, buoyed by cooling UK inflation and broad-based U.S. dollar softness. The rally marks the pound’s strongest run since July and underscores investor optimism that the Bank of England could ease policy without stoking inflation risks.
Recent UK consumer price data showed headline inflation slowed to 2.6% year-on-year, with services inflation falling to 4.7%. The softer-than-expected readings have encouraged markets to raise their bets on interest rate cuts. Traders are now pricing in around 86 basis points of BoE easing by year-end, with a fourth rate cut in December seen as more likely than not. At the same time, weaker U.S. economic data and progress in global trade negotiations have put downward pressure on the dollar, making sterling more attractive in relative terms.
GBP/USD price dynamics (March 2025 - April 2025) Source: TradingView.
Momentum signals reinforce bullish structure, but RSI points to caution
From a technical standpoint, GBP/USD has cleanly broken above key resistance at $1.3366 and is targeting the next hurdle at $1.3448, with $1.3498 seen as a longer-term objective. The uptrend remains supported by the 50-day EMA at $1.3252 and the 200-day EMA at $1.3075. Price action also continues to respect an ascending channel that has guided the pair higher since early April. The 14-day RSI has climbed above 70, flashing a potential warning that the pair is entering overbought territory and could face near-term consolidation.
On the downside, immediate support lies at $1.3366, with a deeper pullback finding buyers near $1.3302. A break below the nine-day EMA at $1.3194 could undermine the short-term bullish outlook, though the broader structure remains intact unless price slips beneath the ascending channel’s base around $1.3150.
In earlier coverage, we noted the rising divergence between UK and U.S. policy expectations, with the BoE gaining room to maneuver due to softening inflation. With sterling strength now well-established, further gains hinge on a sustained breakout beyond $1.3448 and the absence of risk-off flows that typically favor the dollar.
