GBP/USD Eyes 2026 Rally as Sterling Strength Builds

GBP/USD maintains bullish momentum near 1.2650, with analysts projecting a sustained rally extending into 2026. The pound has gained 0.5% (65 pips) over the past week, supported by improving UK economic fundamentals and Bank of England hawkish stance. Recent UK GDP data showed 0.6% quarterly growth, exceeding forecasts of 0.4%, while inflation remains elevated at 4.2% year-over-year. The BoE's reluctance to signal rate cuts contrasts sharply with dovish expectations for the Federal Reserve, creating favorable conditions for sterling appreciation. Technical indicators show GBP/USD breaking above the 1.2600 resistance level, with the next target at 1.2750 (August 2023 high). The 50-day moving average at 1.2580 provides immediate support. Long-term projections suggest the pair could reach 1.3000-1.3200 by mid-2026 if UK economic outperformance continues and the Fed maintains an accommodative stance relative to the BoE.