GBP/USD bulls target 3-year highs on robust technicals, soft US data

GBP/USD has surged 0.8% to 1.2680, approaching its highest level since April 2022, supported by strong technical momentum and disappointing US consumer sentiment data. The University of Michigan Consumer Sentiment Index fell to 57.7 in May, missing expectations of 63.0 and marking the lowest reading in six months. This soft US data weighed on the US Dollar Index (DXY), which dropped 0.6% to 102.2. Technically, GBP/USD has broken above the key resistance at 1.2670 (61.8% Fibonacci retracement of the 2021-2022 decline), paving the way for a potential test of the 1.2750 level (78.6% Fibonacci retracement). Immediate support now lies at 1.2620 (5-day moving average). A sustained break above 1.2750 could see the pair targeting the psychological 1.3000 mark, especially if UK economic data continues to outperform expectations.