The British pound continued to rise this week as the market focused on the direction of monetary policy from the Bank of England, which has signalled the possibility of cutting interest rates after Q3 2025. GBP/USD broke through a key technical resistance level.

As of the second week of June 2025, the GBP/USD exchange rate surged to 1.2845 from 1.2710 the previous week, hitting an eight-week high. According to data from the UK Office for National Statistics, the latest core CPI (Consumer Price Index) fell 3.2% year-on-year to its lowest level since early 2023. This trend supports market expectations that UK inflation will remain subdued and creates room for the Bank of England to gradually adjust interest rate policy in the coming months.

However, Bank of England Governor Andrew Bailey said in a recent speech that "now is not the time for significant monetary easing," suggesting that monetary policy will continue to be gradually tightened to address structural inflation risks. This comment is supporting the pound in the short term, especially against the backdrop of a weak dollar.

From a technical perspective, GBP/USD has broken above the confluence of its 50-day and 200-day moving averages. A break above 1.2850 could see it reach its next target of 1.2960. However, the Pound could face cyclical correction pressure if US Producer Price Index (PPI) and retail sales data released this week proves stronger than expected.

summary:
The current trend of the pound reflects two major driving forces: improving fundamentals of the UK economy and diverging policy expectations. Investors should continue to pay attention to the Bank of England's interest rate statement and employment statistics as key indicators to judge future policy shifts. In the short term, the pound maintains a bullish trend against the US dollar, but caution is needed in intervening in the US dollar factor.