GBP/USD trades with a positive bias around 1.2930 as USD weakens slightly

GBP/USD continues to show some resilience below the 1.2900 round number and attracted some bargain-hunting buying in Asian trading on Monday. The spot price is currently trading in the 1.2930 area, up nearly 0.10% on the day, and now appears to have ended a two-day losing streak from the one-and-a-half-week low hit last Friday.

The U.S. dollar (USD) started the new week on a weaker note, pausing a three-day rally from multi-month lows, which was seen as a key supportive factor for the GBP/USD pair. Even though the Federal Reserve upgraded its inflation forecasts, investors seemed convinced that a tariff-driven slowdown in the U.S. economy could force the central bank to resume its rate-cutting cycle soon. This, coupled with positive moves in U.S. stock futures, appears to have weakened demand for the safe-haven dollar.

On the other hand, the British pound (GBP) was supported by the relatively hawkish stance of the Bank of England (BoE). Indeed, the Bank of England warned against assuming a rate cut and also raised its forecast for peak inflation this year. This suggests that the BoE will be slower than other central banks, including the Federal Reserve, to reduce borrowing costs, providing additional support for the GBP/USD pair. Additionally, the first breakout above the 200-day simple moving average since November also favors bullish traders.

Looking ahead, traders are now looking to the UK and US flash PMI releases for some meaningful impetus. Beyond that, speeches from influential FOMC members will drive demand for the dollar, which combined with comments from BoE Governor Andrew Bailey should generate short-term trading opportunities around GBP/USD. Still, spot prices remain near their highest levels since November hit last week, with the fundamental backdrop supporting the prospect of further gains.