GBP/USD Eyes Fresh Year High Above 1.2600 Amid Hawkish Boe Bets, US Default Woes

GBP/USD renews its intraday high near 1.2635 as it reverses the previous day’s corrective pullback from the multi-month top heading into Tuesday’s London open.

The Cable pair buyers took a breather amid the UK holiday on Monday, which in turn portrayed the quote’s retreat from the highest levels since April 2022. However, fresh optimism surrounding the Bank of England’s (BoE) optimism and the US Dollar’s failure to defend the latest gains recalled the Pound Sterling buyers.

The quote ignores recently printed downbeat prints of the UK Halifax House Prices for April, down to -0.3% versus 0.2% market forecasts and 0.8% previous readings.

The Guardian reports upbeat Brexit news, allowing the GBP/USD to remain firmer. “EU leaders have signaled their desire to reset relations with the UK, seven turbulent years after the seismic Brexit vote.”

On the same line is the Financial Times (FT) news saying, “The Bank of England (BoE) is set to raise interest rates to their highest level since 2008 on Thursday in the wake of official data last month that showed inflation remained stubbornly high.”

It should be noted that the political disappointment for the ruling Conservative Party in the UK’s local elections and the US Dollar’s corrective bounce amid firmer US Treasury bond yields challenge the GBP/USD bulls ahead of the key BoE and the US inflation numbers.

Before that, US President Joe Biden can propel the market moves as he braces to confront Republican House Speaker Kevin McCarthy, Republican Senate Minority Leader Mitch McConnell, and top congressional Democrats at the White House on Tuesday for a debt-ceiling extension.

Should the US policymakers surprise markets with the positive outcome and a deal to avoid the US default, the recently upbeat US inflation expectations may help the GBP/USD pair to pare its latest gains near the multi-month high.

Technical analysis

GBP/USD retreats from the 78.6% Fibonacci Expansion (FE) of its moves from April 03 to May 02 amid the overbought RSI (14) conditions. The same joins the quote’s inability to provide a daily closing beyond May 2022 peak surrounding 1.2665 to prod the Cable buyers.

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