GBP/USD: Sterling Chases $1.38 in Best Half-Year Showing Since 2009. How Far Can It Go?

UK currency is enjoying a rally not seen in 16 years — tailwinds from Trump’s tariffs, Fed’s rate cut expectations, and overall gloomy prospects for the US dollar are giving it a boost.

💎 Sterling — The Biggest Thing in FX Town?

• The British pound GBPUSD is powering through a rally not seen since 2009, up a whopping 14% from its January lows as it chases the $1.38 handle early Wednesday — a level that hasn’t been on traders’ screens for nearly four years.
• This marks five straight months in the green for the cable, with only January posting a red candle — a rare streak that has chart-watchers talking about a possible breakout continuation well into the summer.
• The pair is also technically rock-solid: trading comfortably above its major simple moving averages with the 50-day line trailing down at $1.3450 — more than 300 pips below current price action.

🪙 Dollar Weakness and Global Macro

• A perfect storm of dollar weakness has helped sterling shine — Trump’s flip-flopping tariffs and his chatter about replacing Powell ahead of schedule have made the greenback look shaky at best.
• Traders are also betting the Federal Reserve is gearing up for a rate cut as early as July or September, further undercutting the dollar’s appeal and pushing risk-seeking flows into the pound.
• Beyond the Fed, gloomy US data and sticky inflation prints are throwing more fuel on the “sell dollar, buy everything else” fire — and the pound is taking full advantage.

🤗 Embracing Summer Liquidity

• Looking ahead, traders are bracing for a lighter liquidity environment — US markets will shutter Friday for the July 4th holiday, with an early close Thursday and fewer big players around.
• But before fireworks and barbecues, the main event is Thursday’s nonfarm payrolls report. Consensus expects 120,000 new jobs in June, down from May’s 139,000. A big miss could boost the odds of a rate cut — potentially more juice for sterling bulls.
• For now, the trend is your friend — but with the pound-dollar up nearly 400 pips in just the past four days, some profit-taking could spark a pullback. Any dip buyers left to keep the party alive? The pair did dip slightly late Tuesday to float around $1.3740.