GBP/USD Price Analysis – April 21, 2025
Daily Price Outlook
The pound rose to near $1.3350 against the dollar in early Monday trading as the dollar weakened. Investors are getting nervous about the economic impact of President Donald Trump’s aggressive trade policies and some are now openly wondering if this could lead to a slowdown in the US economy.
Markets took note as UK Prime Minister Keir Starmer spoke to President Trump for the first time since the White House imposed tariffs on British exports.
Starmer reportedly told Trump that trade should be open but national interests should be protected. According to Downing Street both sides described the call as “ongoing and productive”.
The latest Trump tariffs – 10% on UK goods and 25% on cars, steel and aluminium – have ratcheted up tensions. But hopes of a broader US-UK trade deal are propping up the pound for now as traders see progress in talks as a counterweight to tariff disruption.
Fed Caution May Cap Sterling Gains
Despite the pound’s strength the outlook for GBP/USD could be clouded by comments from Fed Chair Jerome Powell last week.
He said rising tariffs could drive up inflation and slow down the economy – making it harder for the central bank to decide what to do next. But he said no immediate rate change, saying they need to “wait for more clarity”.
These comments suggest a delicate balance ahead for the Fed: navigating inflation risk while managing growth expectations.
If US data shows resilience or if Fed officials get more hawkish the dollar could bounce back – limiting how far the pound can go from here.
For now sentiment is in favour of the pound as the diplomatic tone improves and the dollar softens. But traders will be watching for any change in Fed speak or concrete outcomes from US-UK trade talks.
GBP/USD – Technical Analysis
GBP/USD continues to trade within a well-defined ascending channel and recently surged above the 1.3350 resistance area. The pair is now consolidating near 1.3412 — a key horizontal level — after rejecting the upper boundary of the channel. Price action remains bullish as long as support at 1.3352 holds.
The 50-period SMA at 1.3262 continues to trend upward, confirming strong bullish structure. However, the RSI is now at 81.64, indicating overbought conditions that could trigger a short-term pullback or consolidation before another leg higher.
The entry zone at 1.3352 aligns with the mid-channel support and could attract dip buyers. A bounce from this level would target 1.3412 initially, followed by 1.3458 if bullish momentum continues. A breakdown below 1.3308 would negate the setup and shift short-term bias.
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