GBP/USD extended its rally to a 2025 high of 1.2752 in early NorAm trading, driven by Trump tariff-related concerns that pressured U.S. Treasury yields lower, and with year-end UK-U.S. rate expectations indicating higher UK yields, sterling may have more gains in store.

Retaliatory tariffs from countries hit by U.S. levies have led to lower U.S. Treasury yields, pushing the dollar down. While the UK has remained out of the direct firing line of tariffs, there is a growing risk a protracted dip in global growth that could have tangential affects on the British economy as trade with affected partners slows. For now, given rate expectations, bulls are likely to target resistance at 1.2785, the 200-DMA, with potential for a push above 1.30 if November 2024 highs are exceeded.
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(Paul Spirgel is a Reuters market analyst. The views expressed are his own)