Daily Price Outlook
During the European trading session, the GBP/USD currency pair has gained some bullish momentum, reaching an intra-day high of 1.2934.
However, this recovery seems to lack strong conviction, as the broader global economic outlook remains uncertain. Despite this, the pair is getting a lift from the ongoing decline in the US Dollar, which has been weakening due to changing market expectations.
Bearish US Dollar Outlook Amid Trade War Concerns and Fed Rate Cut Expectations
However, the reason for the weaker US dollar is growing concern about global economic growth, sparked by US President Donald Trump's announcement of large reciprocal tariffs.
These tariffs have raised fears of a prolonged trade war, which could slow down global economic activity. This uncertainty has shaken investor confidence, leading to lower risk appetite and significant losses in global stock markets.
While the US Dollar initially strengthened as a safe-haven currency, its rise has started to slow down as market expectations shift towards the Federal Reserve taking a more dovish approach.
Therefore, this shift in market expectations has led to a more cautious outlook for the USD. Investors now expect the Federal Reserve to start cutting rates again, especially if the US economy slows down due to the tariffs.
As a result, the USD has had trouble attracting buyers, which has helped support the GBP/USD pair.
GBP Strengthened by BoE's Slower Rate Cuts and Positive Outlook for GBP/USD
On the other hand, the British Pound has drawn support from expectations that the Bank of England (BoE) will slow its pace of rate cuts compared to other central banks, including the Fed.
Therefore, the BoE's slower pace of rate cuts compared to the Fed strengthens the GBP, supporting a more positive outlook for the GBP/USD pair, potentially leading to upward movement in its value.
GBP/USD – Technical Analysis
After an aggressive sell-off from $1.3206, the British pound (GBP/USD) has entered a corrective phase, but gains remain capped below the $1.2955 resistance level. The pair is trading just under the 50-period SMA at $1.2957, which coincides with the 38.2% Fibonacci retracement—now acting as resistance.
Price failed to sustain above the key pivot at $1.2913 and is hovering near a critical support zone. If this level breaks, it may open the door toward $1.2821, where the ascending trendline converges with horizontal support.
Downside pressure is reinforced by a sharply falling RSI, currently at 38.71, suggesting bearish momentum still has room to run. The 50 SMA has flattened, pointing to market indecision in the near term. A deeper pullback could extend toward $1.2769 or even $1.2720 if $1.2821 fails to hold.
That said, upside risks remain if GBP/USD can clear $1.2955 decisively. A sustained move higher could see the pair test $1.3014 and $1.3060—levels aligning with the 50% and 61.8% retracements of the recent drop.
However, without a clean break above the 50 SMA and Fibonacci cluster, rallies are likely to face selling pressure. Bias favors the downside as long as price stays below $1.2955. Break below $1.2821 opens room for deeper retracement toward $1.2720.
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