GBP/USD Price Analysis – April 16, 2025
Daily Price Outlook
During the European trading session on Wednesday, the GBP/USD saw a rise, reversing earlier losses, after the UK released softer-than-expected March Consumer Price Index (CPI) data.
Meanwhile, the headline CPI increased by 2.6% year-on-year, slightly below the 2.7% forecast and down from February’s 2.8%. Core inflation, which excludes food and energy, rose by 3.4%, missing the 3.5% expectation. The month-on-month CPI grew by 0.3%, down from 0.4% in February, showing easing inflation in the UK.
As a result of the softer inflation data, markets are adjusting their expectations for the Bank of England's future policy. The cooling inflation in the services sector, now at 4.7% from 5%, and the weak labor market outlook raise the chances of a dovish shift by the BoE in May.
The rise in employers' social security contributions could add pressure on the UK economy, making rate hikes less likely. This has boosted demand for the Pound, pushing GBP/USD to 1.3272, with an intra-day high of 1.3293.
USD Struggles Amid Recession and Trade War Concerns
On the other hand, the US dollar continues to face bearish trend due to concerns about a potential recession and ongoing trade tensions.
These concerns are primarily linked to US President Trump’s economic policies and trade wars, which are raising fears of a slowdown.
The 90-day tariff pause on some US trading partners, excluding China, has failed to reassure markets, with investors still wary of the long-term impacts.
The US economy’s inability to quickly replace Chinese imports could lead to higher prices for substitute goods, dampening consumer spending and economic growth.
Impact of US Dollar Weakness on GBP/USD Amid Trade War Concerns
On the other side, concerns about the ongoing trade war, especially with China, are adding to the US Dollar’s weakness.
The US is still working on trade deals with several countries, including the UK, but the uncertainty surrounding these talks and the potential impact of tariffs is causing worry in the market.
As tariffs increase the cost of imports and put pressure on consumer spending, the outlook for the US economy remains unclear, which is further hurting the US Dollar and causing it to underperform.
Therefore, the US Dollar's weakness, driven by trade war concerns, could benefit the GBP/USD pair, pushing the British Pound higher as market uncertainty reduces confidence in the Dollar's strength.
GBP/USD – Technical Analysis
GBP/USD is extending its upward momentum after confirming a breakout above the key $1.3207 Fibonacci level. The pair has now entered a higher resistance zone, targeting the 1.272 Fibonacci extension at $1.3340.
The rally from the $1.2700 region has been steady, with price consistently printing higher highs and respecting short-term support levels — a sign of sustained buyer interest.
The 50-period Simple Moving Average (SMA), currently at $1.2981, is sloping upward and well below the current price, underlining the strength of the bullish structure.
Momentum indicators also support this trend, with the Relative Strength Index (RSI) at 74.1, showing overbought conditions but not yet diverging. This could signal that bullish sentiment remains intact, though short-term pullbacks should not be ruled out.
Immediate resistance lies at $1.3340. A break above this could expose the next key levels at $1.3412 and $1.3512. On the downside, the first support is seen at $1.3207 — the breakout level — followed by $1.3133, which marks the lower boundary of the most recent bullish impulse.
While overbought signals warrant some caution, price action suggests that dips may offer renewed buying opportunities as long as the pair holds above $1.3133.
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