(Adds comment tag in headline) GBP/USD is poised for further gains as bullish sentiment remains intact despite a recent pullback.

Sterling's rise to a new 2025 high of 1.3787 in European trading faced resistance, leading to a dip into the low 1.37s during early North American trading. However, this shallow retracement suggests that bullish traders are preparing for another upward push.

The positive trend for sterling is evident from its significant recovery from the lows following "Liberation Day," with no signs of losing momentum.

The recent rise of the pound, which has surged two big figures over the past week, faced a temporary setback as U.S. Treasury yields rebounded from their overnight lows.

Amid subdued global trade tones and President Donald Trump's ongoing criticism of Fed Chair Powell regarding rate cuts, haven buying of the U.S. dollar has not intensified.

Market expectations are leaning towards a dovish Federal Reserve, with LSEG’s IRPR indicating a potential 66 basis points of cuts by December 2025. In contrast, the Bank of England is anticipated to implement more moderate cuts. This divergent monetary policy outlook reinforces the bullish case for GBP/USD, with traders eyeing targets around 1.3850 and ultimately the late-July 2021 highs just below 1.40.
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(Paul Spirgel is a Reuters market analyst. The views expressed are his own)