GBPUSD Technical Analysis – The USD lost the support from the tariffs fears

Fundamental Overview

Yesterday, the US PPI report came in higher than expected but the focus was on the details that feed into the Core PCE index, which is what the Fed focuses on. Those details were all very soft and helped to bring the early estimates down to more benign levels. In fact, the Core PCE Y/Y is now projected to fall to 2.6% vs. 2.8% prior. That’s good news for the Fed.

The US Dollar fell across the board as a result and eventually the bearish momentum increased substantially in the evening as the Trump’s tariffs saga came to an end. In fact, the US President announced his reciprocal tariffs that could go into effect in April but the overall tone of it wasn’t aggressive and sounded a lot like the start of a negotiating process to bring tariffs to a fair level for everyone.

On the GBP side, it’s been all about the US Dollar softness and with the markets now less concerned about tariffs, the other major currencies got the green light to appreciate against the greenback. On the data side, the UK GDP yesterday surprised to the upside which helped to brush aside some worries on the growth side.

GBPUSD Technical Analysis – Daily Timeframe

On the daily chart, we can see that GBPUSD finally broke above the key resistance zone around the 1.25 handle. The buyers piled in more aggressively on the breakout and will now target the 1.28 handle. The sellers, on the other hand, will want to see the price falling back below the 1.25 zone to position for a drop into the 1.20 handle next.

GBPUSD Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see more clearly the recent breakout following the benign US PPI and the Trump’s tariffs announcement. If we get a pullback to retest the resistance now turned support, we can expect the buyers to step in with a defined risk below the support to position for a rally into the 1.28 handle next. The sellers, on the other hand, will look for a break lower to target the major trendline around the 1.24 handle.

GBPUSD Technical Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we have a minor upward trendline defining the bullish momentum on this timeframe. The buyers will likely lean on it to push into new highs, while the sellers will look for a break below the trendline and the support to increase the bearish bets into the next trendline. The red lines define the average daily range for today.

Upcoming Catalysts

Today we conclude the week with the US Retail Sales.