The British pound pared earlier gains against the U.S. dollar, with the GBP/USD pair slipping to the 1.3050 zone after briefly breaching 1.3150—its highest level in several weeks. The pullback comes as traders digest renewed volatility in dollar sentiment following fresh tariff developments and mixed macroeconomic signals from the U.S.
Earlier in the week, the dollar weakened broadly after China hiked tariffs on U.S. goods to 84%, up from 34%, intensifying trade tensions. The pound capitalized on the softer greenback and breached the key 200-day Simple Moving Average (SMA) for the first time in over a month.
Market Eyes Tariff Pause, Dollar Swings
Sentiment reversed course after President Trump announced a 90-day pause on reciprocal tariffs but raised the levy on Chinese imports to 125%, effective immediately. This shift provided temporary support for the U.S. dollar, capping sterling’s upward momentum during American trading hours.
Despite the pause, investors remain concerned:
- US-China relations continue to sour, stoking fears of a prolonged trade conflict.
- Recession worries linger amid slowing U.S. industrial output and waning consumer confidence.
- GBP/USD’s RSI hovers near 60, indicating a moderate bullish bias, but with room for correction.
Support and resistance levels to watch:
- Resistance: 1.3080, 1.3150
- Support: 1.2820 (200-day SMA), 1.2760 (50-day SMA), 1.2700 (psychological level)
The currency remains highly sensitive to news headlines, as investors shift focus to U.S. economic indicators for further clues.
US CPI in Focus for Pound Traders
All eyes are now on upcoming Consumer Price Index (CPI) data from the U.S. The market consensus expects annual inflation to slow to 2.6%, down from 2.8% in February. Monthly figures for March are forecast at +0.1% for CPI and +0.3% for Core CPI.
Potential outcomes:
- Stronger-than-expected CPI: could bolster the dollar and pressure GBP/USD.
- Softer core CPI: likely to weigh on the greenback, boosting the pound.
Until then, volatility may remain elevated, with sterling caught between improving technical sentiment and a macro backdrop dominated by inflation uncertainty and geopolitical friction.
In short, GBP/USD’s outlook hinges on inflation data and trade headlines, with the 1.3000 level a key psychological battleground in the days ahead.