GBP/USD rally targets 1.2800 breakout on sterling strength

GBP/USD has extended its rally to 1.2785, gaining 0.4% (50 pips) as sterling continues to outperform major peers. The pound's strength stems from expectations that the Bank of England will maintain higher rates for longer, with UK inflation still running at 4.2% annually. Technical momentum has accelerated after breaking above the 1.2750 resistance level, with the pair now testing the critical 1.2800 psychological barrier. The 14-day RSI at 68 suggests bullish momentum remains intact without reaching overbought territory. Daily trading volume has increased 25% above the 20-day average, confirming strong buyer interest. A decisive break above 1.2800 could open the path toward 1.2850 and potentially 1.2900. Support has formed at 1.2750 (previous resistance turned support) and 1.2700 (50-day moving average). Traders should watch for any dovish shifts from the BoE that could cap sterling gains.