GBP/USD remains anchored by its flattening 10-day moving average at 1.2731, down 0.07% in early North American trading. Despite falling long-term U.S. Treasury yields and below-forecast UK manufacturing PMI data, traders are focused on Friday's U.S. payrolls data. This week, ISM manufacturing and services data, as well as JOLTS, pose headline risks. Under current interest rate conditions, GBP/USD is likely to stay near recent trend highs, with rate futures indicating the BoE and Fed will follow similar rate paths into year-end. However, with the BoE's slightly more dovish rate outlook and persistent U.S. inflation, risks lean towards more USD strength. Minneapolis Fed President Neal Kashkari's comments, suggesting interest rates should stay on hold for an extended period, reinforce this view. U.S. inflation metrics, including the recent core PCE price index, show little progress towards the Fed's 2% target, adding to GBP/USD downside risks unless UK inflation reduction efforts prove effective.

Technically, GBP/USD sustains Monday's gains and targets the March high. Trading within a 1.2802-1.2818 range, the pair shows moderate interest. UK May spending and retail sales data, likely affected by wet weather, add to market focus, with 87% of Barclays customers concerned about higher household bills. With no tier-one UK data or BoE speeches, risk appetite and USD movements will guide GBP. Daily momentum studies are firm, with 5, 10, and 21-day moving averages rising, and 21-day Bollinger bands climbing, signaling a positive setup. A close below the rising 1.2674 21-DMA would end the topside bias. Monday's break of last week's 1.2801 high targets the 1.2893 March top. Sterling bulls remain strong after soft U.S. ISM manufacturing data sank U.S. Treasury yields, with GBP/USD up 0.27% to 1.2780 in North American afternoon trade. Resistance levels are at 1.2803 (March 21 high), 1.2828 (upper 30-day Bollinger band), and 1.2894 (2024 high on March 8). Support is at 1.2745 (10-HMA), 1.2694 (Monday low), and 1.2661 (21-DMA). A slightly more dovish BoE rate expectation for 2024 may temper GBP gains, but the technical setup remains positive barring significant fundamental shifts.

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