Daily Price Outlook
During the mid-European trading hours, the GBP/USD currency pair steadied around the 1.3350 mark after a sharp upward move on Tuesday.
The pair found solid support as investors reacted positively to news that the United Kingdom and the United States are nearing a bilateral trade deal.
This development sparked optimism that a reduction in trade barriers could boost transatlantic commerce and support UK exports, particularly in steel and automobiles.
According to the Financial Times, the deal would see the US lower tariffs on UK steel and cars, while the UK would ease duties on US agricultural products and amend its digital services tax.
This mutual concession is seen as a step forward in strengthening UK-US trade ties post-Brexit and has provided the British Pound with a buffer amid global economic uncertainties.
GBP/USD Reacts Cautiously Ahead of BoE Decision and Fed’s Steady Outlook
Despite the positive trade developments, the GBP/USD pair faced mild pressure as the US Dollar gained some traction ahead of the Federal Reserve’s monetary policy announcement.
The Fed is widely expected to keep interest rates unchanged in the 4.25–4.50% range for a third consecutive meeting.
Fed Chair Jerome Powell and other officials have maintained a cautious stance, preferring to assess the economic impact of new tariff policies and elevated inflation expectations before making any adjustments.
Meanwhile, investors are closely watching the Bank of England’s upcoming policy decision, scheduled for Thursday. The BoE is expected to lower interest rates by 25 basis points to 4.25%, marking its fourth rate cut since the easing cycle began in August last year.
Market participants are especially focused on the BoE’s guidance, with speculation mounting that the central bank could adopt a more aggressive easing tone given rising global trade concerns and competitive pressures from China.
Pound Supported by Trade Hopes but Faces Pressure from Rate Cut Outlook
On the other side, the GBP remains broadly supported on the back of UK-US trade optimism, yet the growing anticipation of monetary easing by the BoE is capping further gains.
Investors worry that a global shift in supply chains—particularly an increase in Chinese exports—could hurt the competitiveness of UK products. As a result, policymakers may feel increased urgency to support the domestic economy with looser financial conditions.
Meanwhile, US-China trade discussions are also on the radar, with US officials set to meet their Chinese counterparts in Geneva later this week.
Thus, the positive breakthrough in those talks could lift broader risk sentiment, potentially providing further near-term direction for the GBP/USD pair.
GBP/USD – Technical Analysis
GBP/USD is trading near $1.3351, maintaining its recent upward momentum within a rising trendline that has supported the pair since early May.
The 50-day Simple Moving Average (SMA) at $1.3324 is providing critical dynamic support, aligning closely with the recent swing low, reinforcing the short-term bullish bias. The pair's steady climb is characterized by a series of higher lows, indicating sustained buying interest.
The recent pullback found support around the $1.3324 level, coinciding with the trendline and the 50-SMA, confirming this as a key pivot zone.
A break above the immediate resistance at $1.3385 could trigger further gains toward the next significant resistance at $1.3413, a level that aligns with a previous consolidation area. Beyond this, the $1.3442 mark represents a major swing high, acting as the next key target for bulls.
The Relative Strength Index (RSI) is currently at 55.86, suggesting mild bullish momentum with room for further upside before hitting overbought levels.
However, a break below the trendline and the $1.3324 support could expose the pair to a deeper correction, potentially targeting the next support at $1.3309, followed by the $1.3258 level.
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