Pound sterling price rises against dollar as U.S.-China trade sentiment improves
GBP/USD rebounds to 1.3320 as risk sentiment improves. Traders await U.S. jobs data and BoE decision
The British pound gained ground against the U.S. dollar on Friday, reversing a three-day slide as investors grew more optimistic about de-escalation in the U.S.-China trade conflict. The GBP/USD pair climbed to 1.3320 in early European trading, rebounding from a weekly low of 1.3260. The rally comes as market sentiment improves following comments from the Chinese Commerce Ministry signaling openness to renewed trade discussions with Washington.
The dollar weakened modestly ahead of the U.S. Nonfarm Payrolls (NFP) report for April, due later Friday, with the DXY index slipping to 99.85 from a two-week high of 100.38. The U.S. economy is forecast to have added 130,000 jobs, a notable slowdown from March’s 228,000 reading, while average hourly earnings are projected to rise 3.9% year-over-year. The data is likely to influence expectations ahead of the Federal Reserve’s next policy meeting on May 7, where markets currently anticipate no change to interest rates.
GBP/USD price dynamics (March 2025 - May 2025) Source: TradingView.
BoE seen cutting rates next week as UK inflation softens
Despite the pound’s recovery, the currency continues to lag more risk-sensitive peers amid widespread expectations that the Bank of England will cut interest rates by 25 basis points next week. Weaker-than-expected UK inflation data for March, combined with higher employer contributions to social security and lingering global economic uncertainty, has strengthened the dovish case.
From a technical standpoint, the pound’s bounce remains supported by rising short- and long-term moving averages. The RSI is attempting to climb back above 60, a level that could confirm renewed bullish momentum. The pair faces immediate resistance at the three-year high of 1.3445, while support lies near the April 3 high of 1.32.
In our prior analysis, we noted that the pound had entered a consolidation phase after reaching multi-year highs in April. The current bounce is consistent with that broader trend, as risk-on flows and dollar retracement offer near-term support. However, the currency remains sensitive to both U.S. labor data and the BoE’s rate guidance in the coming days.
