On Wednesday it was stable at 1.3436. The pound was supported by a sell-off following rising trade tensions between the US and Europe over Greenland.
US President Donald Trump has threatened to impose tariffs on imports from the United Kingdom, Denmark, Norway, Finland, France, Germany and the Netherlands if these countries do not agree to transfer control of Greenland to the United States. In response, investors began withdrawing from US assets, including the dollar, and reallocating funds to European currencies and gold.
While recent UK labor market data showed weakness, with near five-year highs and the biggest fall in payrolls since November 2020, there are some positive developments. These include a reduction in redundancies, the stabilization of vacancies and unemployment, and a slowdown in wage growth that aligns with the Bank of England's inflation target.
This backdrop sets the stage for further interest rate cuts by the Bank of England. The central bank's base case suggests a final cut to 3.50% in April, with market expectations of one more cut by mid-year and a 60% chance of a second cut by December.
Technical analysis
On the GBP/USD chart for the last quarter hour, the market is forming a wide consolidation range around the 1.3455 level. Today we expect the range to extend to 1.3395. A correction to 1.3450 is likely, followed by a continuation of the downtrend towards 1.3326, with a possible drop to 1.3220. This scenario is supported by the MACD indicator, with its signal line above zero and pointing downwards.
On the H1 chart, the market is consolidating around 1.3450, with a possible drop towards 1.3400. If this level is broken, the downtrend could extend to 1.3326. The stochastic oscillator confirms this bearish outlook as its signal line remains below the 50 level and continues to point downwards.
Conclusion
The growth of GBP/USD is closely linked to the weakening of the US dollar, mainly driven by geopolitical tensions and changing market sentiment. UK labor market data and planned rate cuts from the Bank of England further support the pound's position. Technically, GBP/USD may continue its downward correction in the near term, with key support levels at 1.3395 and 1.3326.
By RoboForex Analysis Department
Disclaimer: Any forecast contained herein is based on the author's personal opinion. This analysis cannot be considered trading advice. RoboForex assumes no responsibility for trading results based on the trading recommendations and reviews contained herein.
