The GBP/USD exchange rate rose strongly above the 1.3200 mark during the Asian trading session on Tuesday, further consolidating the technical upward trend. The current trend is mainly due to the sustained selling pressure of the US dollar, which stems from the continued deterioration of market confidence in the prospects of the US economy.

Global trade concerns remain a key factor dragging down the US dollar, "according to market research

According to reports, Asian countries have imposed tariffs on US goods up to 125% as a countermeasure against the Trump administration's high tariffs of 145%, raising global concerns about the US industrial chain's dependence on external raw materials. This development has triggered investors' pessimistic expectations for the US economic outlook and pushed the US dollar index (DXY) to hover at a three-year low.

Monetary policy divergence widens, pound gains policy support

Unlike the Federal Reserve's market expectation of a cumulative interest rate cut of 90 basis points by 2025, the Bank of England (BoE) is facing a more complex pattern of inflation and wage growth, which limits its room for short-term interest rate cuts. Investors have therefore reduced their bets on the Bank of England cutting interest rates next month, becoming an important force supporting the pound.

Enhanced optimism weakens the safe haven nature of the US dollar

Against the backdrop of Trump's temporary suspension of tax increases on electronic products, overall market sentiment has improved and demand for safe haven US dollars has declined. The pound, on the other hand, benefited from its "risk friendly" asset attributes and received additional buying support.

The daily chart shows that the GBP/USD has successfully reached the technical resistance of 1.3100, with the current upward target pointing towards the resistance of 1.3260. If it breaks through this level, it will further open up space to rise towards the September high of 1.3345 last year.

Key Data Outlook: UK Employment Report and Federal Reserve Trends in Focus

The market is eagerly awaiting the upcoming UK employment data, which will play a key guiding role in the future trend of the pound. At the same time, the United States will release the New York Fed Manufacturing Index, and if the performance is weak, it may exacerbate market concerns about a slowdown in the US economy.

In addition, Federal Reserve Chairman Powell will deliver a speech on Wednesday, and investors will pay attention to the strength of his wording on the path of interest rate cuts, which may exacerbate the volatility of the US dollar and affect the short-term direction of the GBP/USD.

Editor's viewpoint:

The pound currently has multiple bullish intersecting supports, including weak US dollar fundamentals, decreased probability of UK interest rate cuts, and sustained technical breakthroughs. However, if the UK employment data or Powell's speech sends hawkish signals, it may limit the further rise of the pound.

Set an observation level around 1.3260 in the short term, and if the breakthrough is successful, the mid-term goal can be set towards 1.3345; If encountering obstacles, it is not ruled out to call back to 1.3100 for technical sorting.