At the start of the week, GBP/USD has revisited the 1.3200 area. This rise is driven by the weakening of the US Dollar.
The British pound has gained momentum, marking its fifth consecutive daily increase. This trend aligns with falling US yields and a drop in 10-year gilt yields.
Impact Of Trade Tariffs
The improved sentiment in risk-related markets follows easing concerns over tariffs. President Trump’s announcement that smartphones and computers are temporarily exempt from new Chinese import tariffs has influenced market dynamics.
Should GBP/USD move past the 2025 peak at 1.3207, it may target the 2024 high of 1.3434. On the downside, initial support is identified at the 200-day SMA at 1.2817, followed by the April low at 1.2707 and the 100-day SMA at 1.2643.
Momentum indicators show a strong bullish trend, with the Relative Strength Index (RSI) near 65. The Average Directional Index (ADX) stands around 27, suggesting moderate trend strength.
The opening moves this week for GBP/USD have been shaped by a confluence of shifting macroeconomic signals, particularly from across the Atlantic. A brief return above the 1.3200 threshold came alongside a broader softening in the US dollar, which in turn has been pressured by cooling US Treasury yields and the ebbing of trade tensions.
From a broader perspective, recent interventions in the global trade narrative—primarily Washington’s move to suspend tariffs on consumer electronics from China—have provided temporary relief in riskier asset classes. That reprieve has prompted a rebound in sterling, which many short-term traders see as a potential continuation pattern rather than a singular move triggered only by the dollar’s retracement.
Haley’s midweek statement fuelled the relief rally further, especially given the timing with stronger-than-expected earnings across US tech firms. That combination caused USD outflows, encouraging rotational interest into higher-beta currencies, with the pound benefiting in particular.
Technical Analysis
Technically, there’s little mystery around 1.3207. It’s the ceiling left behind in mid-year trade, and price action around it will be watched closely this week. If price comfortably clears that range with volume and closes above it, the potential for a run at 1.3434 grows. Above that, historical resistance won’t kick in again meaningfully until the 2022 swing highs, though that scenario requires confirmation by both economic data and sustained risk appetite.
Support lies not that far beneath. The 200-day simple moving average at 1.2817 remains a structural floor from a trend-following perspective. Below that, the April trough at 1.2707 and the 100-day average near 1.2643 become successive technical check-points. These levels are likely to draw attention if global yields start to turn or if risk headlines shift narrative trajectory.
Momentum, for now, remains firm. An RSI in the mid-60s suggests there’s still room before the pair enters overbought conditions. The ADX hovering near 27 tells us the trend is valid but not overstretched. In practical terms, that sets a backdrop for continuation rather than exhaustion—for now.
What this means is that we are in a space that requires some patience but not inactivity. It’s an environment where directional bets can play out if paired with discrete entries and proper stops. In times where headlines drive sharp shifts, it’s often not the magnitude of the move but the speed that punishes late or poorly positioned trades. Watching bond markets will provide early clues.
Short-week data such as UK CPI or comments from Federal Reserve board members may only serve as catalysts if they trade against the current tide. Otherwise, this remains a momentum-driven, dollar-sensitive trade. For those operating in the derivatives space, implied volatility metrics and forward curve shapes will be natural starting points this week.
