GBP/USD forecast: Forex Friday – May 23, 2025

Today’s stronger UK retail sales print further underpinned the GBP/USD. Hitting its highest level since February 2022, the cable was testing the $1.35 handle at the time of writing on the back of a 5-day winning run. The GBP/USD has been supported from both sides of the pond: stronger UK data and a weakening US dollar. Unless something changes fundamentally or we see a bearish technical reversal now that rates are testing a multi-year resistance band between $1.35 to $1.40, the short-term GBP/USD path of least resistance remains modestly to the upside. The broader resilience in the GBP/USD forecast appears driven less by sterling strength and more by a faltering US dollar. Markets remain fixated on Washington’s deepening structural woes—chief among them, ballooning debt levels. Trump’s tax cuts remain a point of fiscal contention, and investors are gradually waking up to the uncomfortable truth: unless there’s a meaningful course correction in US fiscal policy, the cost of government b...