GBP/USD shows a strong bullish trend, recently touching 1.3200 for the first time in six months. This rise comes as the US Dollar weakens following the introduction of new tariffs by the Trump administration, which has affected market sentiment.
This week, limited UK economic data is expected, while the upcoming US Nonfarm Payrolls report on Friday could impact market movements, with March’s figures acting as indicators of the economic effects of the tariffs.
Gbp Usd Bullish Momentum
The GBP/USD pair has gained 0.40% and continues to trade above the mid-1.3000s, with expectations for further increases amid a declining US Dollar. The US Dollar Index has dropped to around 101.35 as the tariffs increase fears of a recession, which may prompt the Federal Reserve to consider further interest rate cuts.
With GBP/USD now trading comfortably above the mid-1.30s, the bounce towards 1.3200 reflects not just technical strength in the pair, but also a broader narrative developing in favour of Sterling. A loss of confidence in the US Dollar has tilted the balance. What we’ve seen this week is a continuation of that pattern, with downside pressure on the greenback as markets weigh potential policy responses.
Trump’s latest tariffs have introduced fresh uncertainty into the US economy. While not an unfamiliar move, the timing has led to some notable movement in currency markets. The US Dollar Index sliding towards 101.35 tells us there’s a shift underway. The market isn’t just reacting to headlines—it’s adjusting for what may be more prolonged softness in US economic indicators.
Friday’s Nonfarm Payrolls will give us a clearer read on whether these early signals of economic discomfort are rooted in actual labour market stress. March’s reading will help verify whether business sentiment and employment have been affected yet. Traders should prepare for a market that may reprice Federal Reserve policy expectations if the print arrives weaker than consensus. The Fed remains under pressure to support growth if data doesn’t hold up.
Fed Policy And Market Sentiment
From our view, the reduction in rate hike expectations—possibly even leaning towards renewed cuts—has further eroded Dollar appeal. That’s providing ongoing support to Sterling, making rallies more sustainable than they may have appeared earlier in the year. With limited UK data on the docket, short-term pricing in GBP/USD will likely continue to be driven by shifts in US sentiment and yields.
Technically, the move through 1.3150 has cleared a key level, inviting momentum-driven buying. With the pair proving resilient above 1.3120 through the past five sessions, support appears to be consolidating at higher levels, reinforcing short-term bullish bias. In derivatives, short call options with strikes near 1.3250 are already being re-evaluated amidst expectations that this upside could continue before any retracement begins.
What we’re watching now is this balance between Fed expectations and actual economic performance. If the payroll data confirms softening, it would further diminish appetite for the Dollar. That type of scenario could shift volatility pricing across GBP/USD options, particularly with a pickup in demand for topside hedges.
Price action alone doesn’t exist in a vacuum. Volume has also come in on the upswings, which gives weight to the directional move. Until we see a material change in sentiment or surprise data out of the UK or the US, the current path of least resistance, particularly for short maturity exposures, remains tilted higher. Traders would do well to stay nimble around macro releases, and not rely on extended ranges holding amid these shifts.
