The GBPUSD pair surged to 1.3578, with strong UK retail sales data pushing the pound to a three-year high. Discover more in our analysis for 26 May 2025.
GBPUSD forecast: key trading points
- GBPUSD reached a three-year high, driven by strong data and geopolitical developments
- Markets expect only one more rate hike from the Bank of England before the end of the year
- GBPUSD forecast for 26 May 2025: 1.3593 and 1.3625
Fundamental analysis
The GBPUSD pair soared to 1.3578 on Monday, propelled by robust UK retail sales figures for April.
Warm spring weather encouraged consumer spending in April, with retail sales rising by 1.2% compared to March, well above the expected 0.2%.
Over the past week, the GBPUSD rate gained 1.5%, hitting its highest level since 24 February 2022 on Friday. Rising UK government bond yields have made the pound more attractive to foreign investors. However, concern remains over Britain's public finances, with the country currently holding the highest borrowing levels among developed economies. The yield on 30-year bonds surpassed 5.5% on Friday, despite an anticipated drop in energy bills.
An additional boost for the pound came from a UK-EU agreement easing some trade barriers and enhancing defence cooperation.
Futures market expectations currently point to a 38-basis-point rate cut from the Bank of England by year-end, implying one cut of 0.25% and a 50/50 chance of a second.
The GBPUSD forecast is positive.
GBPUSD technical analysis
On the H4 chart, the GBPUSD pair is likely to continue its upward trajectory, with a retest of the 1.3593 high in sight. A firm breakout above this level would open the way to the next target at 1.3625.
Summary
The GBPUSD pair strengthened to a new high not seen since February 2022. The pound’s momentum is supported by strong macroeconomic data and consensus in UK-EU trade relations. The GBPUSD forecast for today, 26 May 2025, expects the bullish wave to extend towards 1.3625, passing through 1.3593.
