GBP/USD Edges Lower Toward 1.2300 Amid Resurgent US Dollar and Trade War Fears
GBP/USD has reversed its two-day rally and is heading toward 1.2300 as the US Dollar regains strength on heightened safe-haven demand. The pair’s decline follows renewed concerns over potential trade wars under the Trump administration, with threats of tariffs on China, Mexico, and Canada weighing on market sentiment. Meanwhile, disappointing UK labor market data, including a rise in unemployment and slower employment growth, have added pressure on the British Pound. Despite Monday’s sharp rally fueled by USD weakness during the Martin Luther King Jr. holiday, the pair now struggles to maintain momentum. Technical indicators signal bearish sentiment, with immediate support at 1.2230 and resistance at 1.2300. KEY LOOKOUTS • GBP/USD slips toward 1.2300 as the US Dollar regains momentum on trade war concerns. • UK labor data disappoints with rising unemployment and slower wage growth. • Technical indicators suggest bearish momentum, with key support at 1.2230 and resistance at 1.2300. • US market sentiment and Wall Street performance may further impact the pair’s trajectory. GBP/USD continues moving lower toward 1.2300, due to a rising US Dollar amid growing fears of a full-scale trade war and weak data on the UK labor market. The pair had its latest dip driven by renewed safe-haven demand for the dollar following the new round of Trump’s tariffs threats against China, Mexico, and Canada. Additionally, disappointing UK employment figures, including a rise in the unemployment rate to 4.4% and slowing wage growth, have further dampened the Pound’s resilience. Technical indicators point to bearish momentum, with immediate support at 1.2230 and resistance near 1.2300, as traders closely monitor US market sentiment for further directional cues. GBP/USD is trending lower towards 1.2300 as the USD is gaining strength with fears of the trade war, weak UK labor data, and also due to some bearish technical signals that could see further downsides. • The pair has been trending lower towards 1.2300 after a two-day rally led by a resurgent US Dollar. • Safe-haven demand for the greenback rises amid growing trade war fears and tariff threats by the Trump administration. • Disappointing data shows unemployment edging higher to 4.4%, with wage growth slowing and employment changes sharply declining. • The US considers tariffs on China, Mexico, and Canada, fueling uncertainty and boosting the Dollar. • Bearish momentum is reflected in the Relative Strength Index (RSI) and key support at 1.2230, with resistance near 1.2300. • GBP/USD erased Monday’s 1.3% gain, losing 0.6% by Tuesday, highlighting a volatile trading pattern. • US equity and bond markets, as well as Wall Street, are integral to the analysis of further market moves in GBP/USD. GBP/USD continues downwards, falling into the 1.2300 region as the Greenback gains upward momentum on higher safe-haven money flows. Inflationary anxiety has returned amid growing trade-war fears, thanks to the prospect of tariffs proposed by the White House against Beijing, Mexico City, and Ottowa, the latter two because of their “abuse of our country,” according to President Trump. Disappointing UK labour market data has been weighing on the British Pound lately. The unemployment rate edged up to 4.4%, while wages growth slowed down, and the employment gains reduced sharply, decreasing the Pound’s ability to keep up with the Dollar’s gain. This was enough to take the wind off the sails of GBP/USD’s recent upswing, having rocketed sharply 1.3% higher Monday. GBP/USD Daily Price Chart. Source: TradingView Prepared By ELLYANA Meanwhile, bearish momentum dominates, as reflected in the Relative Strength Index (RSI) slipping toward 50 after reaching 70 earlier this week. Key support levels are identified at 1.2230 and 1.2200, while resistance is seen at 1.2300 and 1.2350. Traders are closely watching US market sentiment, as Wall Street’s performance could further influence the pair’s direction. There is little major economic data to be released from the US in the short term, but geopolitical events and announcements regarding tariffs are going to drive things, and that could either help support the Dollar’s haven appeal or provide some respite for GBP/USD. TECHNICAL ANALYSIS GBP/USD clearly continues to demonstrate bearish momentum as it falls towards the 1.2300 level. On the 4-hour chart, Relative Strength Index (RSI) dropped from overbought territory close to 70 into neutral 50 to lose any positive strength. Significant supports are now marked at 1.2230, with both the 20-period and 50-period SMAs meeting at that point. Another strong support point would be the level of 1.2200 followed by a point of static 1.2160. On the upside, immediate resistance lies at the 1.2300 psychological level, with further hurdles at 1.2350, coinciding with the 100-period SMA, and 1.2370, aligning with the 38.2% Fibonacci retracement of the recent downtrend. The pair’s inability to hold above the 1.2300 mark suggests continued downside risks unless a significant catalyst emerges to revive bullish sentiment. FORECAST GBP/USD could see an upside recovery if market sentiment improves or if the US Dollar weakens due to a shift in geopolitical or economic factors. Positive developments, such as a resolution to trade tensions or better-than-expected UK economic data, could bolster the Pound. Breaking through immediate resistance around 1.2300, and then reaching to 1.2350 (where lies the 100-period SMA) with the potential upside targeting 1.2370 in line with the 38.2% Fibonacci retracement of the latest downtrend could be possible after a breach through above this level for quite some time as it can suggest a turning of the bears around and possibly increased demand. On the downside, GBP/USD remains vulnerable to further losses, particularly if the US Dollar strengthens due to safe-haven demand amid escalating trade war fears. Weakness in UK economic data, such as rising unemployment or slowing wage growth, could exert additional pressure on the pair. A clear break lower to 1.2230 support, where the 20-period and 50-period SMAs meet, would widen opportunities for a drop down to 1.2200 and 1.2160. The extent of the decline will be exacerbated if bearish momentum continues since lower GBP/USD levels are possible during a bearish trend, especially with no positive cues or change in market mood.