GBP/USD Price may Slide Further

Risk Appetite Improves

Markets regained their risk appetite, with U.S. stock indices posting notable gains, while gold prices declined, nearing the $3,200 /oz mark as the U.S. dollar strengthened. The trade truce agreement between the United States and China—under which U.S. tariffs on Chinese goods were reduced from 145% to 30%, and China lowered tariffs on U.S. goods to 10% for a renewable 90-day period, was welcomed by markets as it allows time for further negotiations. Additionally, sentiment was boosted by President Trump’s announcement of a possible phone call with the Chinese President.

Key Economic Data

UK wage data for March came in stronger than expected at 5.5%, compared to expectations of 5.2%, while the unemployment rate remained steady at 4.5%. Elevated wage levels are seen as a potential barrier to further interest rate cuts by the Bank of England, as they may contribute to sustained inflation, supporting the pound against other currencies.

Today, markets await the release of U.S. Consumer Price Index data for April. Expectations suggest the YoY core CPI may remain stable at 2.8%, while the YoY inflation headline is projected to hold at 2.4%. It’s worth noting that the Federal Reserve kept interest rates unchanged at its last meeting and signalled the possibility of maintaining them beyond the 90-day grace period initiated by President Trump, during which the announced tariffs were suspended to allow time for trade negotiations. As a result, Fed members prefer to wait until these tariffs are implemented, evaluate their impact on the U.S. economy, and respond accordingly.

The GBP/USD Exchange Rate is Moving Within a Reversal Pattern

At the end of last April, the GBP/USD price reached multi-month highs before retreating due to profit-taking, settling into the current trading zone between 1.3382 and 1.3047. Earlier this week, the pair failed to hold above the neckline of the head and shoulders pattern at 1.3265, suggesting a potential decline toward the low end of the current trading zone.

A daily close below the low end of the zone could trigger a downtrend, potentially leading the price towards 1.2775. In this scenario, the support level at 1.2886 should be closely monitored.

Levels to Consider in the Opposite Scenario

A daily close above the high end of the current trading zone would indicate renewed bullish momentum, possibly paving the way for a move toward 1.3607. In this case, the resistance level at 1.3450 should be considered.

GBP/USD price – Daily Chart

Chart Source: ADSS Platform