Market participants witness GBP/USD regaining momentum as the US dollar experiences broad-based selling pressure.

Diverging central bank expectations create favorable conditions for sterling bulls,solana wallet extension with the BoE potentially maintaining higher rates than peers.

Technical factors combine with fundamental drivers to support the pair's recovery from recent pullbacks.

The GBP/USD pairing has attracted renewed buying interest during Monday's Asian trading session, effectively halting its corrective decline from last week's multi-month highs above 1.2700. This upward movement has propelled the exchange rate back above the psychologically significant 1.2600 level, primarily driven by modest weakness in the US dollar across currency markets.

Growing concerns about the trajectory of US economic growth, coupled with market expectations for potential Federal Reserve policy adjustments, have prevented the greenback from building upon its recent three-day recovery rally. The US Dollar Index (DXY), which measures the currency against a basket of major counterparts, begins the new trading week on softer footing, surrendering much of Friday's gains that had pushed it to weekly highs.

Conversely, the British pound continues to demonstrate relative strength amid speculation that the Bank of England might implement less aggressive monetary easing compared to other major central banks. However, potential headwinds emerge from geopolitical developments and trade policy uncertainties that could influence the UK's economic outlook. These factors may temper excessive sterling optimism and create potential resistance levels for the GBP/USD pair.

Recent economic indicators suggesting persistent inflationary pressures in the United States have reinforced expectations that the Federal Reserve might maintain current interest rate levels for an extended period. This scenario could provide underlying support for the US dollar and potentially limit significant upside for the GBP/USD exchange rate in the near term. Market participants should exercise caution when considering whether the pair can sustain its upward trajectory from January's lows below 1.2100.

Attention now turns to upcoming US economic data releases, beginning with manufacturing sector indicators, which could provide fresh directional cues. The week's highlight remains Friday's employment report, with Nonfarm Payrolls data expected to significantly influence market expectations regarding the Fed's policy path and consequently impact dollar valuation.