GBP/USD surges to 1.2980 three-year peak on fiscal policy concerns

Sterling has rallied to a three-year high of 1.2980 against the US dollar, gaining 0.85% (110 pips) as concerns over US fiscal policy weigh on the greenback. The pound's strength reflects a shift in investor sentiment toward riskier assets amid growing unease about the US budget deficit and debt ceiling debates. UK economic data has also supported sterling, with services PMI holding above the 50 expansion threshold. The dollar index has declined 0.6% to 105.85, its lowest level in six weeks. Technical indicators suggest GBP/USD faces immediate resistance at the psychological 1.3000 level, with support established at 1.2920. A sustained break above 1.3000 could open the path toward 1.3050, last seen in early 2022. Traders are monitoring upcoming Bank of England communications for any hawkish signals that could further boost the pound.