GBP/USD price rallies as U.S. dollar weakens and UK economic outlook shifts
GBP/USD shows bullish momentum as it breaks past key resistance levels
GBP/USD has shown robust bullish momentum over the past few days, climbing steadily from support levels near 1.3130 and recently surging past the 1.33 handle. This upward movement follows a period of consolidation between 1.3130 and 1.3250, where multiple bullish breakouts formed a clear upward trajectory.
The pair is now testing resistance levels around the 1.3325–1.3340 range, where upward movement has previously faced hurdles. A clean break above these levels could signal further gains, potentially targeting the 1.34 region, which aligns with previous peaks seen earlier in May.
GBP/USD price dynamics (May 2025) Source: TradingView.
Breakout above key resistance signals potential upside
The price has successfully broken above significant resistance at 1.3280, signaling increased potential for further upward momentum. The breakout from a symmetrical triangle pattern around the 1.3250 zone has established that buyers are in control. Should the price maintain momentum and break above the current resistance range, it could pave the way for a move toward 1.34. However, the pair is encountering resistance in the 1.3325–1.3340 range, which has capped upward movement in recent sessions.
Support is found at 1.3230, just above the 1.32 zone, with a rising trendline from earlier in the month offering additional bullish confirmation. If GBP/USD pulls back toward these support levels, it could present a buying opportunity, especially with the 1.3175 region also providing support. A deeper pullback to 1.31, a strong psychological and technical support level, would be a key area to watch.
U.S. dollar weakness and BoE outlook boost GBP/USD
The recent rise in GBP/USD can be attributed to broad weakness in the U.S. dollar, following news of ongoing foreign exchange discussions between the U.S. and South Korea. Both countries agreed to continue talks, which led to speculation that the U.S. administration might support a weaker dollar. This news combined with domestic developments in the UK, where the jobless rate rose to 4.5% and wage growth slowed, has boosted expectations that the Bank of England (BoE) may continue easing, especially after last week’s 25bps rate cut.
Deputy Governor Sarah Breeden emphasized the need for long-term bond market reforms, and Catherine Mann highlighted the necessity for clearer signs of weakening pricing power before the BoE supports additional rate cuts. As GBP/USD continues to test resistance at 1.3325–1.3340, the outlook remains positive, especially if the U.S. dollar stays weak.
As previously discussed, the price of GBP/USD remains in an uptrend, with the next key resistance at 1.3340. A break above this level could push the pair toward 1.34, while a failure to break through could lead to consolidation or a short-term pullback.
