GBP/USD taps fresh 40-month high on renewed Greenback softness

• GBP/USD closed above the 1.3600 level for the first time since February of 2022.
• UK economic data continues to soften, limiting bullish Cable momentum.
• US consumer sentiment figures to cap off the trading week.

GBP/USD climbed into fresh 40-month highs on Thursday, closing above the 1.3600 handle for the first time in over three years. Broad-market investor sentiment climbed after US Producer Price Index (PPI) inflation figures came in cooler than expected, pummeling the US Dollar as investors pile back into bets of a Federal Reserve (Fed) rate cut in September.

UK Industrial and Manufacturing Production figures continue to sink, contracting at a faster pace than expected in April. US PPI inflation also chilled in May, pushing off immediate concerns of a tariff-fueled spark of inflation. However, tumultuous policy choices by the Trump administration could still kick off a fresh round of price volatility, and are expected to push inflation metrics higher in the months ahead.

The University of Michigan's (UoM) Consumer Sentiment Index for June will land on markets on Friday to wrap up the trading week, and median market forecasts expect an overall rebound in aggregated consumer sentiment survey results. Investors will also keep a close eye on the UoM's 1-year and 5-year Consumer Inflation Expectations, which are holding uncomfortably high at 6.6% and 4.2%, respectively.

GBP/USD price forecast

Despite cracking the ceiling and pushing into fresh multi-year peaks, GBP/USD is still too close to recent congestion for bulls to declare outright victory just yet. Cable could be poised for a fresh technical pullback, which would put price action on pace to fall back into a still-rising trendline from January's lows near 1.2100.

GBP/USD daily chart