The GBP/USD exchange rate experienced a near 1% uptick on Monday, propelled by a weaker US Dollar and a modest resurgence in demand for the Pound Sterling. As the currency pair approaches the 1.2700 level, trading has encountered resistance around the 200-day Exponential Moving Average (EMA), suggesting that upward momentum may be stalling.
Meanwhile, US President Donald Trump has reiterated his intention to impose a substantial 25% tariff on imports from Canada and Mexico. The tariff package is scheduled to take effect at midnight EST Tuesday, potentially heightening market volatility. While traders have become accustomed to President Trump’s inconsistent approach to his threats since taking office, the current situation is creating a sense of uncertainty that is impacting overall market sentiment.
On the economic front, data for the UK is notably sparse this week, leading traders to focus on tariff developments and the impending Nonfarm Payrolls (NFP) report due at the end of the week. There has been a marked decrease in confidence regarding the US economy over the past few days, making upcoming NFP figures particularly critical for investors. Additionally, several Federal Reserve officials are slated for public appearances throughout the week, and the US ISM Services Purchasing Managers Index (PMI) data is expected on Wednesday. Recent findings have indicated a slight contraction in business activity expectations for March, with the ISM Manufacturing PMI declining to 50.3, still above the crucial threshold of 50.0 that delineates expansion from contraction.
In terms of the outlook for GBP/USD , the current trading pattern reveals that the pair is once again testing the resistance level at the 200-day EMA around 1.2700. Following a period of sideways movement, where the price has oscillated between the 200-day EMA and the 50-day EMA near the 1.2540 range, bullish momentum has been steady. However, the potential for further upside appears limited, as technical indicators suggest overbought conditions, while sellers have yet to initiate a significant downturn.
