GBP/USD surged to a 9-week high of 1.2690, riding the upper 30-day Bollinger Band higher, before facing resistance near 1.27, but with UK inflation persistent and economic data positive cable may continue its rise toward its 200-DMA by 1.2788. However, risks remain for sterling bulls. Tariff discussions by U.S. President Donald Trump, while not directly targeting the UK, could have a significant impact on global trade, vis-a-vis China and the euro zone, which may have knock-on effects for Britain. Persistent inflation also poses a concern, though higher UK rates currently support GBP/USD. If longer-term gilt yields return to January highs and stoke fiscal concerns, high-for-longer rates may shift from a benefit for sterling to a detriment.

For now, with U.S. dollar and Treasury yields weakening as Trump-related trades unwind, GBP/USD with its relatively high interest rate outlook should remain well bid. Key targets include 1.2731, the 200-WMA, and 1.2788, the 200-DMA. A close above 1.2767 -- the 50% Fibo of the 1.3434-1.21, September-January range -- may put early November highs just above 1.30 in sharper focus.
GBP Chart:

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