The GBP/USD exchange rate saw a notable rise on Monday, supported by a weakened US Dollar and a modest recovery in Pound Sterling flows. The pair approached the 1.2700 level, though it continues to face resistance from the 200-day Exponential Moving Average (EMA), indicating a struggle to break free from this technical barrier.
US President Donald Trump renewed his threats of imposing a 25% tariff package on Canada and Mexico, set to take effect at midnight EST Tuesday. While markets have grown accustomed to Trump’s unpredictable policy actions, there is growing uncertainty this time around, causing some volatility and shaking general market sentiment.
On the UK economic front, there is limited data expected this week, leaving investors to grapple with ongoing tariff threats and the looming release of the US Nonfarm Payrolls (NFP) report on Friday. This key economic release will likely be pivotal in shaping market sentiment, as confidence in the US economy has weakened recently.
Meanwhile, several Federal Reserve officials are scheduled to speak throughout the week, and the US ISM Services PMI will be released on Wednesday. Preliminary data suggests that business activity expectations for March have slightly declined, with the ISM Manufacturing PMI falling to 50.3, indicating slower expansion. Although still above the 50.0 threshold, which separates expansion from contraction, the decline from February’s 50.9 was more pronounced than expected.
GBP/USD Technical Outlook: Bullish Momentum Slows
The GBP/USD pair is once again testing the 200-day EMA around the 1.2700 mark, though it has remained relatively flat in recent weeks. Price action is currently trapped between the 200-day EMA and the 50-day EMA near the 1.2540 level, with no clear direction emerging.
While bullish momentum has been evident since GBP/USD bottomed out at 1.2100 in January, upward momentum appears to be slowing. Traders are reluctant to sell off significantly, preventing a fresh downward move, but a breakout to the upside also seems unlikely as technical indicators remain in overbought territory. The near-term outlook for GBP/USD suggests a continuation of this sideways price action, with any significant movement dependent on forthcoming economic data and geopolitical developments.
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