The British pound has stabilized at low levels against the US dollar and may continue its rebound in the short term.
2026-02-25 13:48:17
On Wednesday during the Asian session, GBP/USD continued its upward trend, with the exchange rate remaining around 1.3520. The current rise is mainly due to the temporary weakening of the US dollar, while the British pound, although facing fundamental pressure, is relatively more resilient.
In his State of the Union address, US President Trump emphasized the achievements of economic recovery and declining inflation, but the market is more concerned about the risks of his trade policies. Trump indicated that he might impose tariffs on countries that "violate" trade agreements. Escalating trade frictions typically weaken global economic growth expectations and suppress demand for the US dollar, thereby indirectly supporting non-US currencies.
From a monetary policy perspective, the Federal Reserve remains cautious. Fed officials have indicated that interest rates are likely to remain within their current range for an extended period. This hawkish but not aggressive policy stance has limited the dollar's upward momentum.
UK economic data continues to be weak. The UK retail sales balance fell to -43, significantly lower than market expectations. Demand in the retail sector has been weakening since 2023, indicating that domestic demand in the UK economy remains under pressure. However, uncertainty remains regarding the Bank of England's policy path.
The Bank of England governor stated that a March rate cut remains highly uncertain, while emphasizing that inflation in the services sector remains above target. The Bank of England's chief economist also warned the market against excessive optimism regarding a decline in inflation. Overall, the weaker dollar and slower UK economic growth have offset each other, keeping the pound sterling in a relatively strong, volatile pattern in the short term.
From a technical perspective, GBP/USD is currently in a short-term uptrend. The area around 1.3520 is the current equilibrium zone between bulls and bears, and the price has been consolidating at high levels for several days. The key resistance level is around 1.3550, which is a dense area of previous swing highs.
If the exchange rate breaks through this area with significant volume, it may open up further upside potential to around 1.3600. The first support level to watch is 1.3450, which is a short-term pullback defense zone; if it falls below 1.3400, the short-term bullish structure may be damaged, and the exchange rate may retest the 1.3320 area.
In terms of technical indicators, the momentum indicator remains in the neutral to strong zone, indicating that the upward trend has not yet entered an overheated stage, but the rate of increase is slowing down, and the market is more likely to enter a volatile upward rhythm.
Editor's Note:
The current GBP/USD exchange rate movement exhibits a typical "passive rise in a weak dollar environment." The pound's rise is not due to strong economic fundamentals, but rather a structural opportunity arising from its relative weakness against the dollar. The future direction of the exchange rate will depend primarily on two factors: first, whether US trade policies will escalate further; and second, whether the Bank of England will signal a clearer interest rate cut.
If the divergence between US and UK monetary policies widens, the pound may continue to strengthen; however, if global risk sentiment deteriorates, the pound's upside potential may be limited.
In his State of the Union address, US President Trump emphasized the achievements of economic recovery and declining inflation, but the market is more concerned about the risks of his trade policies. Trump indicated that he might impose tariffs on countries that "violate" trade agreements. Escalating trade frictions typically weaken global economic growth expectations and suppress demand for the US dollar, thereby indirectly supporting non-US currencies.
From a monetary policy perspective, the Federal Reserve remains cautious. Fed officials have indicated that interest rates are likely to remain within their current range for an extended period. This hawkish but not aggressive policy stance has limited the dollar's upward momentum.
UK economic data continues to be weak. The UK retail sales balance fell to -43, significantly lower than market expectations. Demand in the retail sector has been weakening since 2023, indicating that domestic demand in the UK economy remains under pressure. However, uncertainty remains regarding the Bank of England's policy path.
The Bank of England governor stated that a March rate cut remains highly uncertain, while emphasizing that inflation in the services sector remains above target. The Bank of England's chief economist also warned the market against excessive optimism regarding a decline in inflation. Overall, the weaker dollar and slower UK economic growth have offset each other, keeping the pound sterling in a relatively strong, volatile pattern in the short term.
From a technical perspective, GBP/USD is currently in a short-term uptrend. The area around 1.3520 is the current equilibrium zone between bulls and bears, and the price has been consolidating at high levels for several days. The key resistance level is around 1.3550, which is a dense area of previous swing highs.
If the exchange rate breaks through this area with significant volume, it may open up further upside potential to around 1.3600. The first support level to watch is 1.3450, which is a short-term pullback defense zone; if it falls below 1.3400, the short-term bullish structure may be damaged, and the exchange rate may retest the 1.3320 area.
In terms of technical indicators, the momentum indicator remains in the neutral to strong zone, indicating that the upward trend has not yet entered an overheated stage, but the rate of increase is slowing down, and the market is more likely to enter a volatile upward rhythm.
Editor's Note:
The current GBP/USD exchange rate movement exhibits a typical "passive rise in a weak dollar environment." The pound's rise is not due to strong economic fundamentals, but rather a structural opportunity arising from its relative weakness against the dollar. The future direction of the exchange rate will depend primarily on two factors: first, whether US trade policies will escalate further; and second, whether the Bank of England will signal a clearer interest rate cut.
If the divergence between US and UK monetary policies widens, the pound may continue to strengthen; however, if global risk sentiment deteriorates, the pound's upside potential may be limited.
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