FX.co ★ GBP/USD

The Cable recently experienced a notable decline, falling to a four-week low against the US Dollar (USD), with the exchange rate reaching 1.2470. This drop came as market participants reacted to the threat of new tariffs from former President Trump, which triggered a flight to safety. By the time the markets closed, the GBP/USD had recovered slightly, trading at 1.2565, though it remained under pressure. Traders are closely watching for signs of further recovery, as the pair managed to claw back some 150 pips. Geopolitical Factors and Market Sentiment: The impact of geopolitical events, such as threats of tariffs and changes in trade policy, continues to influence market sentiment. While the immediate threat of new tariffs may have caused an initial shock, the broader market reaction has been more muted. However, this still highlights the volatility surrounding GBP/USD and the importance of staying alert to any significant shifts in geopolitical developments. As the US and UK economies continue to face uncertainty, traders must remain vigilant to navigate the potential market fluctuations that could arise from these events. Technical Analysis of the GBP/USD: On Friday, the Cable showed signs of recovery, with the pair making a solid rebound and approaching the 1.2600 level. This move represented nearly a full percent gain in a single day, giving the pair bulls hope for a fresh upward leg. After suffering a sharp decline from the peak of 1.2615, the pair is now attempting to retest these higher levels. However, the rally faces a significant obstacle in the form of the 20-day Exponential Moving Average (EMA), which is currently situated near the 1.2664 mark. This moving average could act as a resistance level, potentially limiting further upside momentum.

The 14-day Relative Strength Index (RSI) offers further insight into the current market dynamics. After turning oversold, the RSI has managed to rebound but remains trapped within the 20.00-40.00 range. This suggests that, despite the recent recovery, downside momentum is still in play. The RSI's positioning reflects ongoing bearish sentiment, signaling that the Pound could face continued pressure in the near term.