GBPUSD strengthens amid trade negotiations and weak US data

GBPUSD has stabilized after a short-term correction. Earlier, the pair reached a three-year high and subsequently pulled back, but was able to halt the decline due to the weakening of the US dollar and improved fundamental factors for the British pound.

The court ruling on Donald Trump’s tariffs was a key driver for the dollar’s decline and the currency pair’s rise. The US Court of International Trade blocked most of the tariffs proposed by the administration, creating new legal uncertainty. The White House has filed an appeal, but this decision has already increased pressure on the dollar as market participants began reassessing the likelihood of broader tariff measures in the future. Goldman Sachs noted that this could modestly ease inflation expectations while boosting confidence in currencies, including the British pound.

The Federal Reserve (Fed) maintains a cautious stance, focusing on balancing growth deceleration and inflationary pressures. This constrains the dollar’s upside potential, especially against a backdrop of weak US data. Q1 GDP contracted by 0.2%, while weekly jobless claims rose more than expected. These signals of economic slowdown reinforce a bearish market sentiment.

Meanwhile, business confidence in the UK reached a nine-month high amid easing trade tensions with the US. Following a temporary pause in the Trump administration’s tariff hikes and the agreement on key terms of a trade deal with Washington, corporate concerns have significantly eased. The most notable improvement came from relaxed import conditions for automobiles, aluminum, and steel.

The technical picture for GBPUSD signals a sustained upward trend. Prices remain above key support levels of 1.3400 and 1.3300. The pair is trading above the EMA(20) and EMA(50) moving averages, confirming the current bullish trajectory. The Relative Strength Index (RSI) sits at 64, indicating no overbought conditions. MACD shows positive momentum, though with oscillating divergence between its lines.

Current recommendation: 

Buying at the current price. Take profit — 1.3600. Stop loss — 1.3400.