Photo by Colin Watts on Unsplash
 

GBP/USD is well on its way to a second straight week of strong gains as the US Dollar (USD) gives up the ghost on the back of ongoing trade war rhetoric undercutting the Greenback’s strength. The Pound Sterling is on pace to close in the green for a third straight month against the US Dollar, as the pace of Cable gains continues to pick up the pace and hit multi-year highs.

The Federal Reserve (Fed) is set to announce its first rate decision of the year on Wednesday, with no change expected. Investor focus will be on forward guidance, particularly signals around the timing of potential rate cuts. Futures markets currently price in two quarter-point cuts by the end of 2026.

Recent announcements of further intentional trade frictions from US President Donald Trump have done the Greenback no favours as of late. Donald Trump’s latest batch of tariff threats targeting key EU members as well as the UK over ownership of Greenland have largely fallen on deaf ears. Despite Trump’s ambiguous claims that things are “progressing on Greenland”, there appears to be little evidence that European nations are currently poised to back down from counter-tariff measures should the need arise.

GBP/USD price forecast
 

Cable is knocking into its highest bids in 51 months, or a little over four years, and the pair has broken through key technical levels that hampered the Pound’s mid-2025 bull run. Bidders are back, stronger than ever with a steadily-weakening US Dollar in tow. However, 1.4000 remains a key technical hurdle for a bullish continuation, and several months of firm gains followed by a one-sided decline is something of a pattern that GBP/USD traders should be used to by now.

GBP/USD daily chart
 

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