FX.co ★ GBP/USD

The GBP/USD currency pair experienced an upward surge on Monday, primarily fueled by a notable depreciation of the US dollar and burgeoning optimism regarding a potential revitalization of sterling funding. However, this bullish momentum proved fleeting, as the pair subsequently retreated to the 1.2700 level, where price action remained tightly constrained by the 200-day exponential moving average (EMA). This pivotal technical indicator acted as a crucial battleground, reflecting the ongoing struggle between buyers and sellers. A significant catalyst for market volatility was US President Donald Trump's renewed threat to impose substantial 25% tariffs on goods from Canada and Mexico. This threat, scheduled to take effect at midnight ET on Tuesday, injected a considerable degree of uncertainty into global markets. While market participants have grown accustomed to President Trump's propensity for issuing political threats, the perceived seriousness of this particular instance amplified concerns. The potential for these tariffs to materialize contributed to a palpable sense of unease, impacting investor sentiment and driving fluctuations in currency values. From the UK's perspective, the economic data calendar remained relatively sparse this week, leaving market participants to grapple with the dual pressures of the looming tariff threat and the highly anticipated non-farm payrolls (NFP) data due on Friday. The NFP data, a key indicator of US labor market health, is poised to play a crucial role in shaping market expectations and influencing Federal Reserve policy decisions.

Furthermore, a growing sense of fragility pervaded trader confidence in the US economy, adding another layer of complexity to the market landscape. Investors are keenly awaiting the NFP data, which will provide valuable insights into the strength of the US labor market. In addition, the scheduled public appearances by Fed policymakers and the release of the US services PMI data on Wednesday will be closely monitored. The services PMI data, reflecting business activity in the services sector, is expected to reveal a slight contraction in March, following a decline in the ISM Manufacturing PMI. This decline, although remaining above the critical 50.0 threshold, signaled a potential slowdown in economic momentum. Technically, the GBP/USD pair's return to its 200-day moving average, hovering around the 1.2700 mark, highlighted the ongoing consolidation phase. The pound has been trading within a confined range, bounded by the 200-day moving average and the 50-day moving average, situated near 1.2540. While the pair's bullish trajectory since its January low of 1.2100 remained intact, signs of waning momentum were evident. GBP traders exhibited reluctance to initiate a significant sell-off, preventing a new downtrend from emerging. However, a fresh uptrend appeared equally improbable, as technical oscillators remained entrenched in overbought territory, suggesting limited scope for further upward movement. This delicate balance between bullish and bearish forces underscored the prevailing uncertainty and the potential for significant price swings in the coming days.