Date: March 28, 2025
Author: DailyForex.pk News Desk
Pound Sterling soared near six-month highs against the US Dollar on Thursday, driven by market reaction to President Donald Trump’s sweeping reciprocal tariffs and expectations of a possible US recession.
Key Highlights:
- GBP/USD spikes near 1.3200 as USD weakens sharply following aggressive US tariff measures.
- Trump imposes 10% tariffs on UK imports—the lowest among global trading partners.
- UK unlikely to retaliate; PM Starmer urges caution against trade war escalation.
- UK Services PMI for March revised down to 52.5, but GBP remains strong.
- Traders eye US PMI reports for further direction.
What’s Driving the GBP/USD Rally?
The British Pound (GBP) has been one of the top performers in the forex market this week, capitalizing on the broad weakness in the US Dollar (USD). The surge came after President Trump unveiled a 10% blanket tariff on all imports, with additional duties targeting 60 nations. Fortunately for the UK, it received the lowest tariff bracket, sparking optimism that Britain might avoid the brunt of a global trade war.
In contrast to other major economies preparing retaliatory measures, UK Prime Minister Keir Starmer has opted for a diplomatic approach, stating that the government is preparing for “all eventualities” but won’t rush into a trade war.
Technical Outlook for GBP/USD
- Current Price: 1.3175
- Resistance Levels: 1.3200, 1.3434 (September 2024 High)
- Support Levels: 1.2930 (61.8% Fibonacci Retracement), 1.2922 (20-day EMA)
The GBP/USD pair broke above key resistance near 1.2930, supported by strong bullish momentum. The 14-day RSI is near 70, indicating overbought conditions, yet momentum remains intact.
UK Data Softens, But Market Focus Remains on US Tariffs
Despite the upbeat price action in GBP/USD, the latest UK S&P Global/CIPS Services PMI was revised down to 52.5, slightly below expectations. However, markets are largely focused on US data and the broader impact of Trump’s trade policies.
Upcoming US economic data, including ISM Services PMI and Jobless Claims, will be closely watched. Any signs of a slowdown could reinforce expectations of Fed rate cuts, further pressuring the Dollar.
Conclusion: Is GBP/USD Headed for 1.3434?
With safe-haven flows leaving the Dollar and the UK avoiding harsh tariff treatment, the bullish case for GBP/USD remains strong. If the pair manages to hold above 1.3000 and US economic data disappoints, a run toward the September high of 1.3434 could be in play.
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