GBP/USD: Sterling Gains Support from UK Fiscal Confidence

GBP/USD extends its recovery momentum, trading above 1.2650 as UK Chancellor Rachel Reeves' fiscal policies continue to underpin sterling strength. The pound has gained 0.4% against the dollar this week, benefiting from improved market confidence in the UK's economic outlook following recent budget announcements. The dollar index has retreated to four-month lows near 106.00, providing additional support for cable's advance. EUR/GBP remains under pressure at 0.8330, highlighting sterling's relative outperformance among major currencies. USD/JPY holds steady around 151.50 as traders balance dollar weakness against Bank of Japan policy expectations. Technical indicators suggest GBP/USD could test resistance at 1.2700 if current momentum persists. Key support levels are identified at 1.2600 and 1.2550. Market participants await Thursday's US GDP data and Friday's UK manufacturing PMI for further directional catalysts.