The GBP/USD currency pair has experienced range-bound trading following a correction from four-month highs against the US Dollar (USD). With a neutral bias, the coming week’s price movement will be heavily influenced by macroeconomic data releases and geopolitical developments, particularly Trump’s tariff policies and the US Nonfarm Payrolls (NFP) data.
Market Dynamics and Key Factors Impacting GBP/USD
US Tariffs and Their Impact on GBP/USD
President Donald Trump’s reciprocal tariffs, set to take effect on April 2, will be a crucial driver for the USD. If the tariff list is narrowed, it could ease concerns over economic slowdown, strengthening the USD and putting downward pressure on GBP/USD. Conversely, stronger-than-expected trade restrictions could increase risk aversion, potentially benefiting the Pound Sterling as a safer alternative in global trade.
UK Inflation and Bank of England Rate Expectations
The UK Consumer Price Index (CPI) data for February showed inflation at 2.8% YoY, slightly below the expected 2.9%. This lower inflation figure increased speculation that the Bank of England (BoE) may cut interest rates in May, weakening GBP.
However, UK Retail Sales data for February surged by 1%, well above the expected -0.3% decline, indicating resilient consumer demand. This could counterbalance bearish sentiment and support GBP/USD in the near term.
US Economic Data and Federal Reserve Policy Outlook
The US economy remains a key influence on GBP/USD. Key economic releases this week include:
Fed officials, including Raphael Bostic, have pushed back on multiple rate cuts, stating that he only sees one rate cut in 2025. This stance has helped the USD remain resilient, preventing GBP/USD from breaking above the 1.3000 resistance level.
Technical Outlook: GBP/USD Remains in a Bullish Setup
The daily chart suggests that GBP/USD maintains a bullish bias, with key indicators showing positive momentum:
The 14-day RSI remains near 60, indicating continued buying pressure.
GBP/USD is trading above its 21-day Simple Moving Average (SMA) at 1.2903, acting as initial support.
Key upside targets
3000 psychological level (must close above for sustained gains)
Key downside levels
A sustained break above 1.3000 could lead to further bullish momentum, while failure to hold above 1.2903 could trigger a deeper pullback.
Outlook: Neutral Bias With Key Data Driving Volatility
Given the mix of bullish technical indicators and uncertain fundamentals, the GBP/USD outlook remains neutral. Trump’s tariffs and US employment data will be the primary catalysts for movement. Traders should closely monitor macroeconomic developments, particularly NFP numbers and any surprises from the Federal Reserve or the Bank of England.
Expect higher volatility this week as markets digest economic data and geopolitical developments.
Market Dynamics and Key Factors Impacting GBP/USD
US Tariffs and Their Impact on GBP/USD
President Donald Trump’s reciprocal tariffs, set to take effect on April 2, will be a crucial driver for the USD. If the tariff list is narrowed, it could ease concerns over economic slowdown, strengthening the USD and putting downward pressure on GBP/USD. Conversely, stronger-than-expected trade restrictions could increase risk aversion, potentially benefiting the Pound Sterling as a safer alternative in global trade.
UK Inflation and Bank of England Rate Expectations
The UK Consumer Price Index (CPI) data for February showed inflation at 2.8% YoY, slightly below the expected 2.9%. This lower inflation figure increased speculation that the Bank of England (BoE) may cut interest rates in May, weakening GBP.
However, UK Retail Sales data for February surged by 1%, well above the expected -0.3% decline, indicating resilient consumer demand. This could counterbalance bearish sentiment and support GBP/USD in the near term.
US Economic Data and Federal Reserve Policy Outlook
The US economy remains a key influence on GBP/USD. Key economic releases this week include:
- Tuesday: ISM Manufacturing PMI and JOLTS Job Openings
- Wednesday: ADP Employment Change Report
- Thursday: Weekly Jobless Claims & ISM Services PMI
- Friday: US Nonfarm Payrolls (NFP), which could determine Fed rate expectations
Fed officials, including Raphael Bostic, have pushed back on multiple rate cuts, stating that he only sees one rate cut in 2025. This stance has helped the USD remain resilient, preventing GBP/USD from breaking above the 1.3000 resistance level.
Technical Outlook: GBP/USD Remains in a Bullish Setup
The daily chart suggests that GBP/USD maintains a bullish bias, with key indicators showing positive momentum:
The 14-day RSI remains near 60, indicating continued buying pressure.
GBP/USD is trading above its 21-day Simple Moving Average (SMA) at 1.2903, acting as initial support.
Key upside targets
3000 psychological level (must close above for sustained gains)
- 1.3048 (November 6, 2024 high)
- 1.3150–1.3200 resistance zone
- 1.3300 round figure (longer-term target)
Key downside levels
- 1.2903 (21-day SMA) – immediate support
- 1.2804 (200-day SMA) – major downside risk
- 1.2667 (50-day SMA) and 1.2614 (100-day SMA) – potential bearish targets if selling pressure increases
A sustained break above 1.3000 could lead to further bullish momentum, while failure to hold above 1.2903 could trigger a deeper pullback.
Outlook: Neutral Bias With Key Data Driving Volatility
Given the mix of bullish technical indicators and uncertain fundamentals, the GBP/USD outlook remains neutral. Trump’s tariffs and US employment data will be the primary catalysts for movement. Traders should closely monitor macroeconomic developments, particularly NFP numbers and any surprises from the Federal Reserve or the Bank of England.
- If US data beats expectations, the USD may strengthen, pushing GBP/USD below 1.2900.
- If the UK economy shows resilience and the BoE remains cautious on rate cuts, GBP/USD may retest 1.3000 and beyond.
Expect higher volatility this week as markets digest economic data and geopolitical developments.
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Trade forex, indices, stocks and metals with up to US$100.000 in company's funding.
Complete a challenge to access funding or go for instant deposit.
Trading involves substantial risk. Not financial advice
Complete a challenge to access funding or go for instant deposit.
Trading involves substantial risk. Not financial advice
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.