Key Analysis Points:
- British Pound is a Key Risk Currency
- GBP/USD Awaits Break of 1.30 Peak
- US Dollar Faces Performance Disruption Due to Trump’s Policies
Throughout the week’s trading, the price of the GBP/USD pair was on an upward path with gains extending to the resistance level of 1.2945, the closest point for the GBP/USD pair to move towards the psychological resistance of 1.3000, which will support the strength of the upward trend. The gains of the rebound came in light of the weakness of the US dollar after Trump imposed his tariffs, in addition to the pace of risk appetite, which we have often noted will increase the gains of the British pound against the rest of the other major currencies if it happens.
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US Job Numbers Increase Currency Pair Gains
At the end of Forex market trading last week, the US dollar needed a decent jobs report above expectations to stem its weakness. Instead, it got a major US non-farm payrolls report of +151,000 for February, below expectations of 160,000. At the same time, the country’s unemployment rate rose from 4.0% to 4.1%, meaning the latest data will support the argument for at least three US interest rate cuts during the rest of the year.
Overall, it has been the rising bets that the US Federal Reserve will step on the gas pedal in the face of uncertainty caused by tariffs and economic weakness that have kept the US dollar in check recently. According to economists, “The worst is likely to be yet to come. A cocktail of shocks is being thrown at the US economy: the end of stimulus under Biden, historic political uncertainty that is limiting hiring and investment decisions, trade wars, and DOGE’s attack on the federal government and its contractors. February was too early to see the full impact, but it is very likely to happen over time.”
According to licensed trading platforms, the GBP/USD exchange rate was at 1.2904, after rising 2.62% last week, its strongest weekly gain since November 2022. Furthermore, technical analysts expect the clear push of the GBP/USD pair through the 1.29 lows to target additional corrective gains towards 1.31. Support is at 1.2865.
In general, the US dollar has turned expectations upside down by falling in response to the tariff announcements, and while the evidence that guides us into this week is that the tariffs were undoubtedly positive for the currency. The US dollar price is now tracking US bond yields and interest rate expectations lower, as investors bet that Donald Trump’s policy agenda is a major headwind for growth.
Trading Tips:
Keep in mind that the recent gains in the British pound and the dollar are strong and beware of US inflation figures this week.
US Economy in Trouble
With a wave of tariffs, government layoffs and a spending freeze, there are growing concerns that US President Donald Trump may do more to hurt the US economy than to fix it. Officially, the US labour market remains healthy with an unemployment rate of 4.1% and the addition of 151,000 jobs in February. Furthermore, Trump likes to point to investment commitments from Apple and Taiwan Semiconductor Manufacturing to show that he is getting results.
Moreover, the latest US employment report also found that the number of people stuck in part-time work due to economic conditions jumped by 460,000 last month. In the leisure and hospitality sectors, which reflect consumers having extra money to spend, 16,000 jobs were lost. The federal government cut its employees’ salaries by 10,000 in a possible harbinger of the alarm sounded by the stock market, consumer confidence and other measures about where the economy is headed.
Since January 2025, the economic policy uncertainty index has risen 41% to 334.5, a level that previously indicated recession.
Technical Analysis for the GBP/USD pair today:
According to the trading on the daily chart above, the GBP/USD pair is on an upward channel path that will confirm the bulls’ control by moving towards and above the psychological resistance of 1.3000. From now until reaching it and more, technical indicators have moved towards strong overbought levels, led by the Relative Strength Index and the MACD. In general, the closest resistance levels for the GBP/USD pair are currently 1.2985, 1.3050 and 1.3100, respectively.
Conversely, and over the same time frame, a return to the vicinity of the 1.2740 support threatens the bullish reversal and the return of bear control over the overall trend. Keep in mind that US inflation figures this week, led by the announcement of the consumer price index and the producer price index, will greatly affect the currency pair’s performance, as the data, along with recent US job numbers, will determine the future of US Federal Reserve policies.
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