GBP/USD price holds near $1.33 amid channel breakdown and diverging central bank outlooks
GBP/USD consolidates near 1.33 after breaking trend support
The British pound hovered near 1.3314 against the U.S. dollar on Monday, consolidating after a modest decline in the prior session. The pair kicked off the week on a cautious note after breaking below an ascending channel on the daily chart, raising questions about the strength of the recent bullish trend.
However, GBP/USD remains above its nine-day exponential moving average at 1.3274, offering near-term technical support.
Market sentiment is mixed. On one hand, upbeat UK retail sales data released Friday showed a 0.4% increase in March, beating expectations of a 0.4% decline and marking the strongest first-quarter growth in four years. This has tempered the market’s expectations for aggressive rate cuts by the Bank of England, providing a backstop for the pound. On the other hand, the broader technical picture reflects fading momentum after the pair failed to hold the ascending channel.
GBP/USD price dynamics (March 2025 - April 2025) Source: TradingView.
Dollar strength capped by policy uncertainty and trade tensions
The U.S. dollar has recovered some ground after touching multi-year lows earlier this month, bolstered by lingering uncertainty around U.S.-China trade talks. Although President Trump claimed that negotiations were underway, Treasury Secretary Scott Bessent said over the weekend he was unaware of any direct contact between the two leaders, casting doubt over the timeline for de-escalation. Still, safe-haven demand helped limit dollar downside, especially as investors brace for the Fed’s next policy move.
Expectations remain firm that the Federal Reserve could resume rate cuts as early as June, with markets pricing in at least three reductions by year-end. While this has capped the greenback’s gains, ongoing global trade volatility and ambiguous fiscal messaging from Washington continue to influence risk sentiment and dollar positioning.
Technical levels to watch
Key resistance sits at 1.3400, followed by 1.3434 and the upper boundary of the former ascending channel near 1.3480. A sustained move above these levels could reignite bullish sentiment. On the downside, support rests at 1.3274, with deeper targets at 1.2980 and 1.2577 if bearish momentum accelerates.
In prior sessions, we highlighted the resilience of GBP/USD above 1.3274 amid data-driven optimism. The pair’s hold above this level remains crucial for preserving the short-term bullish bias.
