GBPUSD recovers gains after Trump’s new tariff plans

On Thursday, the GBPUSD currency pair recovered all yesterday’s losses due to reemerged concerns over US economic health. On Friday, March 28, the opening price was 1.29443. 

The GBP drop on Wednesday, March 26, was caused by weaker-than-expected data on Great Britain’s inflation rate, as well as by appreciation of the US dollar. However, the following day, USD failed to consolidate despite the release of US GDP data for the fourth quarter of 2024, which showed the growth of 2.4%, above the forecasted 2.3%. 

The greenback fell under pressure after US President Donald Trump’s statements about new tariffs. Trump announced the plans to impose 25% duties on automobile imports, which are set to go into effect on April 3. The decision raised concerns among traders, since restrictive measures could have a negative impact on trade between the US and key partners, including the UK. The Society of Motor Manufacturers and Traders reports that UK passenger car exports to the US were worth $9.8 billion in 2024, making the US the second largest (after the EU) market for British premium car manufacturers.

Still, UK Chancellor of the Exchequer Rachel Reeves’ spending plan had a positive impact on GBP. The 14 billion pound cut provides the Treasury with a buffer of around 10 billion pounds, reducing the need to issue government bonds. Nick Rees from Monex Europe noted that GBP stability is also related to the UK's relative isolation from the effects of US trade tariffs.

Friday will see the release of the US consumer price index, the Fed's key inflation measure. In case the data is softer than the forecasted monthly growth of 0.3%, USD will remain under pressure.

As of March 28, the Stochastic Oscillator signals a possible market shift to growth. The current position (%K above %D) indicates strengthening of the upward move, which confirms the tendency of the trend to turn into a bullish one. The fall since March 21 has stopped, which indicates the formation of a potential bottom and the beginning of correction.

The MACD indicator shows an uptrend, but the difference between the MACD and the signal line is narrowing, indicating a slowdown in growth.

Current recommendation:

Buy at the current price. Take profit – 1.30140. Stop loss – 1.28400.