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GBP/USD spot rate at publication: 1.3911Bank transfer rates (indicative guide): 1.3524-1.3621Transfer specialist rates (indicative): 1.3687-1.3814Get a specialist rate quote, hereSet up an exchange rate alert, hereThe British Pound reached a fresh multi-month high against the U.S. Dollar in late February when the GBP/USD exchange rate hit 1.4243, but a decline back below 1.40 inevitably raises questions as to whether the pair has now peaked.

Foreign exchange analysts at ING say now is not the time to lose faith in the GBP/USD uptrend and they have this week released a research update detailing how they believe Pound Sterling is the best placed among major G10 currencies.

As a result, strategists at the Netherlands-headquartered lender and investment bank say they expect GBP/USD to rally notably higher from current levels over coming months.

"The fast vaccination and improving UK growth outlook has led to the full repricing of the odds of BoE cuts (in stark contrast to the ECB) - in turn benefiting GBP," says Chris Turner, head of foreign exchange research at ING in London.

The UK budget announced in the first week of March is seen by ING strategists as posing a marginal positive for Sterling as it extends the furlough support scheme until September.

UK Chancellor Rishi Sunak announced a net giveaway for the short-term that will see an additional £65BN in spending, grants and tax breaks made available, meaning the total additional spending and benefits made available during the crisis stands at £352BN.

"On our estimates, the UK has now delivered more fiscal easing than any other G10 country. Yesterday’s mix of tax cuts and spending increases take our estimate of total stimulus through 2020 and 2021 to 14% of GDP," says Adam Cole, Chief Currency Strategist at RBC Capital Markets.

The market meanwhile not believed to be over-subscribed to the view that Sterling will outperform in 2021, meaning positioning won't necessarily be a headwind.

While speculative long GBP/USD positioning has been rising meaningfully in recent weeks, in contrast to many other G10 FX, ING reckon the absolute level is not high.

"This suggests further upside potential for the pound," says Turner.

"We see GBP as the best placed among major G10 currencies and expect GBP/USD to breach 1.50 this year, helped by an anticipated return of the USD bear trend (once the UST sell-off eases), fast UK vaccinations and a still undervalued pound," he adds.

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Consensus meanwhile remains of the view that 2021 will see the Dollar decline, although as we have reported here, this consensus is by no means as solid as it was at the start of the year.

However, ING join other analysts - for instance at UBS (see below) - in saying the Dollar's recent bout of appreciation is likely to be temporary and that the USD bear trend will resume once the sell-off in U.S. Treasury bonds subsides.

Investors have dumped U.S. Treasury bonds, particularly those that are long dated - fearing rising inflation over coming months and years. This has in turn pushed the yield paid out by the bonds which has attracted foreign investor flows, to the benefit of the Dollar.

What drove the Dollar's rebound over recent weeks? Analysts at UBS say the rise in U.S. bond yields, the passing of the $1.9TRN US fiscal package, excessive expectations of USD depreciation at the start of the year, Europe’s sluggish progress in vaccinating its citizens and stock market uncertainty all played a role.

"The reasons behind the current USD rally may persist a little longer," says Thomas Flury, Strategist at UBS.

However, UBS say the dip in the U.S. Dollar offers a good opportunity to position for renewed weakness, something they expect to see later this year.

"We expect the USD to depreciate," says Flury, saying a strong global growth rebound in 2021 will diminish demand for the U.S. Dollar while the Federal Reserve will resist raising interest rates.