GBP/USD rallied to a new 2024 high at 1.3341, bolstered by robust fundamentals and a favorable technical setup, setting the stage for further gains in the near term. A notable driver of the pound’s strength was the unexpected surge in UK retail sales, which heightened expectations for a more hawkish Bank of England. In contrast, the Federal Reserve recently executed a 50 basis point rate cut, signaling a dovish stance compared to the BoE’s steady path. The diverging monetary policies between the two central banks provide an outsized advantage for GBP/USD, as the market now anticipates a widening gap in UK-U.S. rate differentials for the rest of 2024 and into 2025, further supporting sterling strength.

Technically, GBP/USD has shown a strong upward trend, forming higher highs and higher lows since bouncing off the key Fibonacci support near 1.30 on September 11. This bullish momentum is further confirmed by positive futures market positioning, with net long sterling contracts rebounding to 90k by September 10 after dipping in mid-August. The significant increase in long positions highlights growing investor confidence in the pound, supported by hawkish expectations for the BoE. The next key resistance levels lie at 1.3341, the 2024 high, followed by 1.3366 at the upper Bollinger Band on the 21-day moving average, and the February 2022 highs at 1.3437 and 1.3643. On the downside, the first support level is at Friday's low of 1.3269, followed by the 100-day moving average at 1.3229 and the 50% Fibonacci retracement of the 1.3003-1.3341 move at 1.3172.

In the broader outlook, GBP/USD is well-positioned for further gains, supported by a positive economic backdrop in the UK and expectations of further BoE rate hikes. The divergence in UK and U.S. rate paths adds further upside potential for the pound, making it an attractive option for investors. As the pair moves toward key resistance levels, traders should watch for any developments that could shift market sentiment, such as weaker-than-expected UK data or shifts in global risk appetite. However, with technical indicators and positioning favoring further upside, GBP/USD could target the 1.34 area in the short term, with potential to extend toward the February highs if bullish momentum continues.