The GBP/USD pair continues to show resilience below the 1.2900 round-figure mark and attracted some buyers who took some buying action during the Asian session on Monday (3/24). The spot prices are currently trading around the 1.2930 region, up nearly 0.10% for the day, and for now, seems to have snapped two consecutive days of the downtrend to one-and-a-half-week lows touched on Friday.

The US Dollar (USD) started the new week on a weaker note and stalled its three-day recovery move from multi-month lows, which, in turn, was seen as a key factor that acted as a tailwind for the GBP/USD pair. Despite the fact that the Federal Reserve (Fed) raised its inflation projections, investors seem convinced that a tariff-driven US economic slowdown could force the central bank to resume its interest rate-cutting cycle soon. This, along with a positive tone surrounding the US equity futures, seemed to undermine the greenback as a safe-haven.

On the other hand, the British pound (GBP) found support from the Bank of England's (BoE) relatively hawkish stance. In fact, the central bank cautioned against assuming a rate cut and also raised its forecast for inflation to peak this year. This suggests that the BoE will lower borrowing costs at a slower pace than other central banks, including the Fed, which lent additional support to the GBP/USD pair. Moreover, the recent break above the 200-day Simple Moving Average (SMA) for the first time since November favored bullish traders.

Moving ahead, traders now look forward to the release of flash PMIs from the UK and the US for some meaningful impetus. Apart from this, speeches by influential FOMC members will boost the USD demand, which, along with comments by BoE Governor Andrew Bailey, should produce short-term trading opportunities around the GBP/USD pair. That said, spot prices remain well within striking distance of their highest levels since November touched last week and the fundamental backdrop supports prospects for additional gains. (Newsmaker23)

Source: Fxstreet