Sterling remained near 2025 peaks in early NorAm trading on Wednesday and appeared poised to break higher should the unwind of Trump trades and progress toward a Russia-Ukraine peace deal continue. Though GBP/USD was -0.08% at 1.2655, bears have been unsuccessful in pushing the pound below 1.26 over the last four trading sessions. The weakness that drove GBP/USD to its 2025 low of 1.21, linked to rising yields from the Trump trade and UK fiscal concerns, has faded. With yields sliding significantly since the early February tariff delays those concerns have eased considerably. Sterling strength is also supported by UK-specific stimuli. The pound has ticked higher following the BoE's dovish hold on Feb. 6 after UK inflation and upbeat economic data tempered rate cut expectations, and put MPC policy expectations back in sync with Fed policy in the near-term. Adding to the GBP/USD bid, or more accurately the dollar's slide, is the Trump administration's focus on ending the Russia-Ukraine war which, if successful, will remove a significant overhang in Europe, stirring further USD haven unwinds. With the prevailing macro zeitgeist stacked in sterling's favor, bulls will likely target early December highs above 1.28. Should trade and Russia-Ukraine tensions ebb further, November highs above 1.30 will move quickly into focus.
GBP Chart:

(Paul Spirgel is a Reuters market analyst. The views expressed are his own)