Pound sterling price retreats from three-year high as BoE rate cut expectations weigh
British pound trades near 1.3410 after retreating from 1.3445, focus shifts to BoE and global data
The Pound sterling edged lower against the U.S. Dollar on Tuesday, pulling back to near 1.3410 after touching a fresh three-year high of 1.3445 earlier in the day. The modest decline came as traders grew increasingly confident that the Bank of England will lower interest rates at its May 8 policy meeting, amid concerns over global trade tensions and softer domestic economic momentum.
Scotiabank analysts noted that the broader bullish trend for GBP remains intact, but near-term resistance is now seen closer to 1.3750, followed by the key psychological barrier at 1.40. Support, meanwhile, is expected in the mid-to-lower 1.32s. Market sentiment cooled slightly after BoE policymakers reiterated dovish tones, with Megan Greene emphasizing that U.S. tariff policies are likely to have a "net disinflationary" impact on the UK economy. Greene also highlighted concerns over weak productivity and rising employer costs that could dampen labor market strength.
Adding to the cautious mood, Spain’s weaker-than-expected GDP print and lingering uncertainties over U.S.-China trade negotiations further strengthened safe-haven demand for the U.S. dollar. The DXY index steadied around 99.30, offering near-term resistance to GBP/USD upside moves.
GBP/USD price dynamics (March 2025 - April 2025) Source: TradingView.
Labor market data and global trade tensions influence dollar sentiment
Tuesday’s U.S. JOLTS Job Openings report showed 7.19 million vacancies for March, missing estimates of 7.5 million. Despite the miss, broader market attention remains on the upcoming ISM Manufacturing PMI, Q1 GDP, and PCE data, all of which could provide crucial signals about the Federal Reserve’s next steps. Treasury Secretary Scott Bessent’s remarks placing responsibility for trade progress on China added another layer of uncertainty to the global economic outlook.
Investors now await the ISM data for fresh insights into inflation risks, as rising factory input costs could limit the Fed's ability to pursue aggressive rate cuts later this year.
Technical outlook: GBP/USD holds bullish bias despite correction
Technically, GBP/USD maintains a bullish structure, with price action well-supported by rising short-to-long-term EMAs. The 14-day RSI has rebounded from near 60, suggesting underlying bullish momentum remains intact. Immediate resistance is seen at 1.3600, while major support rests near the April 3 high around 1.3200.
As previously discussed during our April coverage, the British pound’s ascent was driven by strong technical breakouts and shifting BoE expectations. While short-term corrections are natural after such extended rallies, the broader uptrend remains in play unless key supports give way.
