GBP/USD extends rally on widening UK-US interest rate differential

GBP/USD has extended its bullish momentum, climbing 0.5% to test 1.2750 resistance as markets focus on the diverging monetary policy paths between the Bank of England and Federal Reserve. The pound's strength reflects expectations that the BoE will maintain higher rates for longer to combat persistent UK inflation, while Fed rate cut speculation grows amid softening US economic data. Sterling has gained over 200 pips from recent lows, with technical indicators showing strong upward momentum. The 50-day moving average at 1.2680 now acts as immediate support, while a break above 1.2750 could target the psychological 1.2800 level. Traders should monitor upcoming UK inflation data and Fed officials' speeches for potential catalysts that could either accelerate the pound's gains or trigger profit-taking in the stretched positioning.