GBP/USD Forecast: Pound Sterling could struggle to hold above 1.2500

Following a consolidation phase in the Asian session on Tuesday, GBP/USD has gathered bullish momentum and advanced to its highest level since June 2022 above 1.2500. The pair's near-term technical outlook suggests that there could be a technical correction before the pair continues to push higher.

The broad-based selling pressure surrounding the US Dollar (USD) since the beginning of the American session on Monday fuels GBP/USD's rally this week. Despite renewed concerns over rising crude oil prices negatively impacting the global economic activity and the inflation outlook, risk flows dominated markets on Monday, not allowing the USD to find demand.

Early Tuesday, the USD stays on the back foot as the market mood remains relatively upbeat with US stock index futures trading modestly higher on the day.

Meanwhile, Bank of England (BOE) policymaker Silvana Tenreyro, who voted to keep the policy rate unchanged at 4% at the last policy meeting, argued on Tuesday that a looser policy stance is needed to meet the inflation target.

"In the absence of further counterbalancing cost-push shocks, I judge inflation is likely to fall well below target," Tenreyro said and noted that the BOE policy is already in restrictive territory. These comments, however, don't seem to be having a noticeable impact on Pound Sterling's performance for the time being.

Later in the day, February Factory Orders and JOLTS Job Openings data from the US will be looked upon for fresh impetus. Nevertheless, the USD is likely to have a difficult time outperforming its rivals unless there is a move toward safe-haven assets in markets.

GBP/USD Technical Analysis

On the four-hour chart, GBP/USD stays near the upper-limit of the ascending regression channel coming from early March and the Relative Strength Index (RSI) is about to rise above 70, suggesting that the pair is close turning overbought.

In case 1.2500 (upper-limit of the channel, psychological level) stays intact, GBP/USD could stage a correction toward 1.2450 (mid-point of the channel) and sellers could target 1.2400 (psychological level) next if that level fails.

On the upside, a daily close above 1.2500 could attract additional buyers and open the door for an extended rally toward 1.2600 (psychological level,s tatic level from June 2022).