GBP/USD experienced a slight increase on Tuesday, positioning Cable near the high end of recent consolidation and around the 200-day Exponential Moving Average (EMA). US consumer sentiment fell in February, raising concerns about economic slowdown, and President Trump reiterated his plans to impose import taxes.
Despite the decline in consumer sentiment, GBP/USD maintained an upward trend, as the market anticipates that Trump may postpone his tariff decisions. Limited data releases are expected from both the US and UK this week, with attention turning to Thursday’s US Gross Domestic Product (GDP) figures.
Tuesday’s activity saw GBP/USD stabilised around the 1.2680 level, following a recovery of 4.7% from January’s low near 1.2100. The GBP remains under pressure due to a technical ceiling just below the 1.2700 mark.
The Pound Sterling is the UK’s official currency, issued by the Bank of England (BoE), with monetary policy its key driver. Economic indicators such as GDP and employment statistics can significantly affect the Pound’s value.
The Trade Balance also plays a role, with a positive balance strengthening the currency while a negative one can lead to depreciation.
This recent uptick in Cable places it in a decisive zone, testing resistance while finding support near the long-term moving average. The price action largely reflects mixed sentiment, where optimism surrounding a potential delay in import duties outweighs weakening consumer confidence. However, with external factors like sentiment readings taking a hit, traders should tread carefully, as market movements may be more reactive to policy developments than fundamental data in the short term.
Given the lack of major data releases from both sides of the Atlantic, movement in the coming sessions is likely to be dictated by broader market risk appetite and positioning ahead of Thursday’s GDP figures. If the US economy shows stronger-than-expected growth, the next test for Cable will be whether it can sustain momentum against a firmer dollar. Conversely, if growth disappoints, we could see further attempts to push beyond 1.2700, though prior rejections from this level suggest that upward traction might be met with hesitation.
Since early January, Sterling has posted an impressive recovery, but losing steam at these levels suggests that traders are wary of chasing the rally much further without additional catalysts. It remains constrained by key resistance zones, and without fresh momentum, a pullback in the direction of short-term support levels could be on the cards. Should traders see a rejection here, attention may shift towards technical markers lower down in the range.
Broader macroeconomic trends continue to dictate movements in the Pound. The BoE’s policy stance remains a key influence, while economic releases such as employment figures, inflation data, and retail performance contribute to shifts in sentiment. Trade balance dynamics add another layer of complexity, with currency strength often reflecting demand for UK goods and services. A strengthening surplus can provide support, while persistent deficits bring downside risks.
With these factors in mind, the next few sessions will reveal whether buyers remain committed near current levels. If resistance gives way, the technical outlook would brighten, but hesitation around 1.2700 suggests that market participants may need further validation before pushing much higher. Should price struggle to clear these headwinds, focus could turn back towards the lower range of recent consolidation as traders reassess positioning.
