GBPUSD failed to hold at the semi-annual high

The GBPUSD currency pair showed strong growth during yesterday's trading session, exceeding the 1.32 level for the first time since early October. However, the bulls subsequently lost about half of Thursday's gains, and the downward movement continues to unfold today. Traders seem reluctant to support further strengthening of the pound against the dollar, and against this backdrop, the price may correct towards the medium-term uptrend line. Buying GBPUSD may only become attractive when the price returns to the 1.3 level.

At first glance, the UK appears to have weathered yesterday's storm in global financial markets relatively easily. Donald Trump imposed import duties of at least 10% on the country. Nevertheless, many officials in the United Kingdom had hoped for more favorable terms. British Secretary of State for Business and Trade Jonathan Reynolds stated that that the UK will not retaliate against the United States, but will seek to remove the tariffs or at least reduce their rates.

According to a Bloomberg survey, investors do not currently view US trade policy as a significant pro-inflationary factor for the UK. Firstly, this is attributed to the absence of retaliatory duties on American exports, which could otherwise accelerate price increases. Secondly, China and other countries most affected by the actions of the United States may seek new markets for their products. This could potentially lead to dumping and more favorable prices for British consumers.

Without a significant new surge in inflation, the Bank of England would have more leeway to cut interest rates. Bloomberg estimates indicate a 90% probability of monetary policy easing in May, a sharp increase from the beginning of the week when the likelihood barely exceeded 50%. Thomas Pugh, an economist at RSM UK, interprets the tariffs as potentially leading to another year of stagnation for the UK economy, estimating the damage at between 0.2% and 0.5% of GDP. He predicts the Bank of England will lower the key rate at least three times by the end of 2025, thereby removing support for the pound.

Consider the following trading strategy:

Sell GBPUSD in the range of 1.305 - 1.31. Take profit - 1.3. Stop loss - 1.32.