The British pound is losing ground against the US dollar, with GBP/USD slipping below 1.3550 during Tuesday’s European session. The pair, which recently touched 39-month highs, faces headwinds from a modest US dollar rebound as attention shifts from trade disputes to US fundamentals.
While the Relative Strength Index (RSI) on the 4-hour chart remains above 60 and the pair stays within the upper half of an ascending regression channel, the market’s bullish bias appears to be fading. GBP/USD is still holding above the 20-period Simple Moving Average, suggesting resilience.
Key technical levels to watch include:
- Immediate support at 1.3500 (round level)
- Midpoint support of the ascending channel at 1.3480
- Deeper support at 1.3400 (round level)
A rebound from these levels is possible if market sentiment shifts, but the recent downward correction indicates traders are cautious as the week unfolds.
Focus Shifts to US Data and Senate Tax Debate
Market sentiment has turned cautious after initial optimism early in the week. The US dollar found support amid easing fears over a prolonged trade conflict, following President Donald Trump’s decision to delay 50% tariffs on European imports until July 9.
US stock index futures are rising more than 1% during the European session, signaling an improved risk mood. However, GBP/USD’s upside is capped as attention shifts to critical US economic releases later in the day.
Traders will be closely watching:
- April Durable Goods Orders
- May CB Consumer Confidence Index
A stronger-than-expected recovery in consumer sentiment could bolster the US dollar, pushing GBP/USD lower. Conversely, weaker data might renew downward pressure on the greenback, offering GBP/USD a chance to regain ground.
Key Levels and Market Outlook
Despite the recent dip, GBP/USD retains a degree of technical strength:
- Resistance at 1.3600 (static level)
- Stronger resistance near 1.3720 (upper limit of the ascending channel)
A break below 1.3500 could trigger a test of 1.3480 and 1.3400, while a sustained move above 1.3600 could open the path to further gains.
Market participants should also monitor the outcome of the Senate debate on President Trump’s tax bill, which could influence the dollar’s direction and, by extension, GBP/USD.
With global trade tensions easing and risk appetite improving, GBP/USD traders face a balancing act between US data releases and technical signals.