The pound continued its rebound against the dollar in early Asian trading on Tuesday, rising to around 1.3550. The recent rise in the pound has been mainly driven by a weaker dollar. Lower-than-expected US retail sales and recent CPI and PPI data have significantly reduced investors' bets on further tightening by the Federal Reserve in the near term. At the same time, the resilience of the UK economy and the relatively hawkish policy signals from the Bank of England have provided additional support for the pound. Changes in US macroeconomic data are reshaping market expectations regarding the Federal Reserve's policy path. Recent US retail sales have been weak, while consumer and producer price data have not shown the significant acceleration feared by the market. Currently, the market's pricing in a September rate hike by the Fed has fallen to around 35%, significantly lower than previous levels. If the US job market continues to cool and inflationary pressures remain manageable, the dollar's interest rate advantage may further narrow, giving the pound sterling more upward momentum against the dollar. The market currently also expects the possibility of further Fed rate hikes this year, but mainly at later times. Current pricing indicates a 69% probability of a rate hike before December, suggesting that investors have not completely ruled out the possibility of renewed policy tightening. This means that the downside potential for the dollar remains somewhat limited, especially if US inflation rebounds or employment data unexpectedly improves, in which case the market may quickly readjust its interest rate expectations. In the UK, the monetary policy environment is also a crucial factor supporting the pound. Bank of England Chief Economist Hugh Peel previously stated that stronger-than-expected UK economic growth further reinforces the necessity of pulling inflation back to the target level through higher borrowing costs. The market has already priced in the possibility of at least one Bank of England rate hike this year, providing some support for the pound in carry trades. However, not all UK economic data is strong. The market is currently focusing on a range of data, including employment, wages, inflation, and retail sales, as these indicators will directly impact the Bank of England's future policy path. The UK unemployment rate is expected to fall to 4.8% in June from 4.9% in May. If the actual result is better than expected, it suggests a resilient labor market, potentially strengthening market expectations that the Bank of England will maintain a tight policy stance, thus driving the pound higher. Conversely, if employment data deteriorates significantly, especially with an unexpected rise in the unemployment rate or a significant slowdown in wage growth, the market may reduce its bets on further tightening by the Bank of England. Therefore, this week's UK employment and inflation data will be crucial catalysts for determining the pound's short-term direction. From a global market perspective, the pound is also indirectly affected by risk appetite. If the dollar remains weak overall and global risk sentiment remains stable, funds may continue to flow into non-dollar assets such as the pound. However, if the situation in the Middle East suddenly deteriorates, energy prices rise rapidly, and global inflation concerns are reignited, the safe-haven dollar may see renewed inflows, thus limiting the pound's gains. Market sentiment is currently generally bullish on the pound, but not extremely optimistic. The pound has reached near recent highs, and investors are awaiting a new round of UK data to confirm the direction of the economy and inflation. Therefore, the current market movement is more like a trend-driven rebound fueled by a weakening dollar, rather than a one-sided rise following a comprehensive improvement in the pound's fundamentals. From a capital allocation perspective, whether the pound can strengthen further depends on whether the divergence between the Bank of England's and the Federal Reserve's policy expectations continues to widen. If UK economic data remains resilient while US data continues to weaken, the UK-US interest rate differential may further tilt towards the pound; conversely, if the US economy shows renewed strong growth signals, the dollar may regain support, and the pound will face pressure for a pullback from its highs. From a daily chart perspective, GBP/USD currently maintains a relatively clear short-term bullish trend, with the exchange rate trading above the 100-day simple moving average and the Bollinger Band middle line, indicating that the overall market trend remains bullish. The current 14-day Relative Strength Index (RSI) is around 64, in positive territory but not yet clearly overbought, indicating that the bulls still have some room to maneuver. However, as the exchange rate approaches the upper Bollinger Band, the risk of short-term profit-taking is also increasing. The primary resistance level to watch is the upper Bollinger Band around 1.3605, which is currently the most important technical resistance. If GBP/USD can effectively break through 1.3605 and hold above that level, the market may open up further upside potential. Conversely, if the exchange rate is resisted near 1.3605, it may enter a period of high-level consolidation and retrace to the middle Bollinger Band around 1.3440. The 100-day moving average around 1.3420 is a more important medium-term support level. If this area is breached, the bullish structure will weaken significantly, and a further pullback towards the lower Bollinger Band around 1.3275 is possible. From the 4-hour chart, GBP/USD remains in a short-term upward trend, with the area around 1.3500 now considered a significant psychological support level. As long as the price remains above 1.3500, the bulls will maintain their advantage in the short term. If it breaks through 1.3605 with increasing momentum, the market may enter a new upward phase; if it fails to break through 1.3605 after multiple attempts, we need to be wary of increased profit-taking at higher levels, and the exchange rate may undergo a technical correction towards the 1.3440-1.3420 area. Editor's Summary: The core driver of the GBP/USD exchange rate remains the divergence in monetary policy expectations between the US and the UK. Cooling expectations of a US rate hike are weakening the dollar, while the resilience of the UK economy and hawkish signals from the Bank of England are supporting the pound. Against this backdrop, GBP/USD maintains a bullish bias in the short term. However, 1.3605 is a key resistance level that the bulls must break through, and UK employment, wage, and inflation data will determine whether the market further strengthens its expectations for a tightening policy from the Bank of England. If UK data continues to be stronger than expected, while US economic data continues to weaken, the probability of the pound breaking through 1.3605 and moving to higher levels will increase; if the UK job market deteriorates significantly or US data strengthens again, the exchange rate may fall back to 1.3440 or even 1.3420.