GBP/USD Holds at 3-Year High 1.2780 on Sterling Strength
GBP/USD maintained its position near three-year highs at 1.2780, consolidating after last week's 1.2% rally driven by hawkish Bank of England expectations. The pound showed resilience despite softer UK manufacturing PMI at 51.2 versus 51.5 expected. Markets price in only 35bp of BoE rate cuts for 2025, supporting sterling's outperformance. The pair tested resistance at 1.2800 twice this week without breaking through, while support formed at 1.2750 (previous resistance turned support). UK wage growth remains elevated at 5.2% annually, reinforcing the BoE's cautious stance on rate cuts. Technical momentum indicators suggest overbought conditions with RSI at 72. A decisive break above 1.2800 could target 1.2850, while failure might trigger profit-taking toward 1.2700. Sterling's strength reflects diverging monetary policy expectations between the BoE and other major central banks.
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