- The GBP/USD forecast shows a weaker dollar amid growing tariff uncertainty.
- Data revealed a smaller-than-expected 2.8% increase in UK inflation.
- Rachel Reeves outlined plans to cut spending due to the weak economy.
The GBP/USD forecast shows growing tariff uncertainty that is weighing on the dollar, allowing the pound to recover. Sterling was down in the previous session after downbeat inflation data and a forecast for weaker growth in the UK budget update.
–Are you interested in learning more about crypto brokers? Check our detailed guide-
The dollar retreated from its highs as traders grew more anxious ahead of new Trump tariffs on April 2. Already, the US president has confirmed tariffs on automobiles that will affect major economies like the Eurozone.
Moreover, market participants expect levies on pharmaceuticals and chips. Trump might also impose reciprocal tariffs and a 25% levy on goods from Canada and Mexico. All these tariffs might ignite trade wars that would hurt the US and the global economy.
Meanwhile, the pound had a difficult day on Wednesday after data revealed a 2.8% increase in UK inflation. This figure came below estimates of a 3.0% increase. As a result, expectations for Bank of England rate cuts increased. Nevertheless, policymakers might remain cautious due to uncertainty over US trade policies.
Additionally, the pound fell after a downbeat UK budget update. Rachel Reeves outlined plans to cut spending due to the weak economy. Forecasts revealed a sharp downgrade in economic growth and higher inflation.
GBP/USD key events today
- US final GDP q/q
- US unemployment claims
GBP/USD technical forecast: Bears struggle below 30-SMA
On the technical side, the GBP/USD price has rebounded to retest the 30-SMA resistance. At the same time, the RSI has risen to the pivotal 50 level which has acted as support and resistance before. The bearish bias remains intact since the price trades below the SMA and the RSI is slightly under 50. However, bulls are challenging this bias.
–Are you interested in learning more about managed forex accounts? Check our detailed guide-
Sentiment recently shifted when the price broke below the 30-SMA. Bulls had shown weakness near the 1.3000 key psychological level, with the RSI making a bearish divergence. However, bears have not found their feet below the SMA.
The price is still clinging to the SMA line, indicating a struggle between bears and bulls. A break above the SMA will allow bulls to take back control and retest the 1.3000 resistance level. On the other hand, if the SMA holds firm, the price will challenge the 1.2851 support level.
Looking to trade forex now? Invest at eToro!
68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
Share
Saqib Iqbal
