Pound sterling price struggles as tariff concerns and BoE policy cloud outlook
GBP/USD retreats from 1.2500 as Trump’s tariffs boost USD demand
The Pound sterling (GBP) climbed higher against the U.S. dollar (USD) on Friday, breaking above a descending trendline resistance, signaling a potential bullish continuation. The GBP/USD pair surged past the 1.25 level, supported by strong UK GDP data and technical breakout confirmation.
The daily chart shows that GBP/USD has been consolidating in a symmetrical triangle before successfully breaking out. This breakout above the descending resistance line suggests a shift in market sentiment from bearish to bullish, with the potential for further upside.
Additionally, renewed optimism around risk assets has fueled demand for the Pound, while U.S. President Donald Trump’s tariff threats have led to mixed sentiment in the U.S. dollar Index (DXY), which hovers around 107.5.
GBP/USD price movement (June 2024 - February 2025) Source: TradingView.
BoE signals caution despite upbeat UK data
Despite better-than-expected UK economic data, the BoE continues to signal a cautious and gradual approach to monetary easing. BoE Chief Economist Huw Pill reiterated that while some policy restrictions could be removed, inflation control remains incomplete. Similarly, BoE policymaker Megan Greene emphasized the need for a restrictive policy stance, highlighting inflation persistence as a key challenge.
While UK economic indicators remain strong, including a 0.4% month-on-month GDP increase in December and better-than-expected UK industrial and manufacturing production, the BoE’s reluctance to signal aggressive rate cuts has capped GBP’s upward momentum.
Market outlook: Key levels and upcoming data
The GBP/USD pair has broken above a key trendline resistance, signaling a bullish continuation. The next resistance levels to watch are 1.2580 and 1.2607, which were the December high. If a pullback occurs, 1.25 will serve as immediate support, while 1.2310 remains a stronger lower cushion.
The 14-day RSI is neutral, indicating that there is still room for further upside movement. Additionally, the 50-day EMA near 1.25 has now turned into support, confirming the shift in sentiment. If momentum holds, GBP/USD could climb toward 1.26, with traders keeping a close watch on Trump’s tariff announcement and the upcoming U.S. PPI data for further market cues.
Previously, The British Pound has shown resilience in recent sessions despite shifting rate cut expectations from the Bank of England. However, global trade tensions and U.S. economic data remain key drivers of GBP/USD movement.
