GBP/USD in a Strong Position: Sterling Rallies on Trade News and Robust Data

Key factors driving GBP/USD movement

The pound's rally stems from improved market sentiment following US President Donald Trump's decision to postpone the imposition of 50% tariffs on EU imports until 9 July. Initially set to take effect on 1 June, the delay has granted diplomats additional time to pursue constructive dialogue and negotiate potential compromises.

This reprieve has boosted global risk appetite, providing further support for the pound, which also drew strength from robust domestic economic data.

UK retail sales rose by 1.2% in April, marking the fourth consecutive monthly increase. These figures underscore the resilience of consumers despite ongoing tax hikes and trade tensions.

Meanwhile, inflation remains elevated at 3.5%, exceeding forecasts and raising some concerns.

The base-case scenario suggests the Bank of England is likely to cut interest rates by 50 basis points by August, with a further reduction possible before the end of the year.

Technical analysis: GBP/USD

H4 Chart:

On the H4 chart, GBP/USD has formed a consolidation range below the 1.3590 level. Today, the pair broke downward out of this range, signalling the likely start of a bearish wave towards 1.3360. A breach of this level could extend the downtrend towards 1.3140, with 1.3360 as the initial target. This scenario is technically supported by the MACD indicator, whose signal line has exited the histogram area and is trending sharply downward.

H1 Chart:

On the H1 chart, GBP/USD previously consolidated around 1.3490 before breaking upward and nearly exhausting its bullish potential at 1.3590. Today, the pair formed a new consolidation range below 1.3590 before breaking downward again. We now anticipate a continuation of the bearish movement towards 1.3360. This outlook is corroborated by the Stochastic oscillator, whose signal line remains below 50 and is descending sharply towards 20.

Conclusion

The pound's recent gains reflect a combination of improved risk sentiment and strong UK economic data. However, persistent inflation and expectations of BoE rate cuts introduce downside risks. Technically, GBP/USD shows bearish momentum, with key support levels at 1.3360 and 1.3140 in focus.

Disclaimer

Any forecasts contained herein are based on the author's particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.