GBP/USD trades near 1.2850 after recovering previous losses, with the Bank of England’s Sarah Breeden speech anticipated. The pair continues its upward trend for the third consecutive session, experiencing pressure from weaker data in the RICS Housing Price Balance, which showed a mere 2% rise for March.
This growth is well below the expected 8%, reflecting stagnation since January’s 20% and February’s 11% increases. Additionally, renewed trade tensions between the US and China have impacted the British Pound, following US tariff hikes on Chinese goods to 125% in response to China’s 84% tariffs on US products.
Improved Market Sentiment
GBP/USD tested higher on Wednesday, surpassing the 1.2800 mark as market sentiment improved after a delay on tariffs by the Trump administration. Although global markets surged, bullish sentiment for the British Pound remained limited, gaining only 0.3%.
Despite the tariff delays, a 10% reciprocal tariff remains active as negotiations continue. The ongoing tariff disputes are expected to primarily affect US agriculture, contributing to a complex economic environment for the UK.
The GBP/USD pair hovering near 1.2850 indicates some resilience in the face of softer data and global trade anxiety. Breeden’s upcoming speech introduces the possibility of fresh guidance from the Bank of England, particularly now that momentum in the housing sector has clearly cooled. The RICS Housing Price Balance figure, coming in at just 2%, not only fell short of predictions but showed a sharp deceleration across three consecutive months. That pattern alone should not be ignored, as the data suggests reduced momentum in property demand or buyer confidence—both of which feed directly into broader economic expectations.
Last week’s reaction in GBP/USD to US-China trade friction, especially around tariff escalations, was an initial slide followed by a steady recovery. Traders appeared to have priced in worst-case tariff news rapidly, which explains why the pair regained ground once US political authorities decided to delay some of the measures. Still, the current calm may be misleading. An active 10% reciprocal tariff remains in place. This adds a layer of persistent uncertainty, particularly for sectors with exposure to either agricultural imports or exports.
Impact of Housing and Trade Factors
Price action pushing above 1.2800 was the technical break watched closely after a period of consolidation. However, the follow-through buying has been modest. A 0.3% gain in the broader session suggests the moves are not propelled by conviction but rather driven by shifting sentiment and hesitation over the trade narrative and domestic data.
From our standpoint, the lack of support in housing activity—combined with tepid market response to a seemingly bullish breakout—does lay the groundwork for caution. Even though the pound is holding its ground, underlying vulnerability is apparent. With the RICS figure dropping so sharply from January’s peak levels, short-term positioning should account for the possibility of further weakness in domestic fundamentals.
We are also keeping a close eye on any signals from Breeden’s commentary, especially regarding inflation expectations and borrowing costs. Should the Bank of England lean towards a more dovish tone due to faltering housing strength, it could weigh further on sterling. On the other hand, any suggestion of resilience in inflation pricing pressures might be enough to keep rate cut bets at bay for now.
For now, technical levels seem to offer both support and resistance within a relatively narrow band, yet the macro backdrop remains anything but stable. With ongoing US-China trade disputes lingering, and no full resolution in sight, currency exposure to external political risks remains high. Price reactions have so far been tempered, but the underlying risks are very much present.
In short, positioning in the coming sessions should weigh the potential for policy updates against fragile consumer sector performance. Managing upside potential while guarding against misinterpreting brief sentiment-driven rallies may offer better entry decisions.
