Why is GBPUSD moving up?

Let's talk about the British Pound and what might happen next. The Bank of England has a rate meeting this week, and a 25-basis-point rate cut is anticipated. Meanwhile, the latest ADP report from the US showed stronger-than-expected job growth, with 183,000 new jobs added—higher than the 148,000 expected and the previous 122,000. This suggests the US labor market is performing better than anticipated.

Now, why is GBPUSD moving higher? This is where I need your input. Looking at the monthly chart, we see GBPUSD respecting the 1.19–1.20 level. Historically, we've seen upward moves from here. So, what’s driving this? Some argue that Europe may face tariffs while the UK avoids them. Others suggest that the worst of the US economic turmoil might be over. But I’m not convinced.

I remain bullish on the dollar because the Bank of England is cutting rates and will likely continue to do so. In contrast, the US just reported strong labor market data. When you have a strong labor market, high inflation, and solid GDP growth, rate cuts are unlikely—rates might even increase. If tax cuts and deregulation happen in the US, rates could rise further. Meanwhile, the UK is likely heading in the opposite direction with more rate cuts.

Something doesn’t add up here. However, I have to respect the trend. In the short term, the market has stopped making lower highs, signaling a trend break. The fact that this is happening around key levels is significant. For now, the bullish trend remains intact above Monday’s low at 1.2253. But if deregulation moves forward, this rally may eventually come to an end.

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