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The British Pound (GBP) faced downward pressure against the US Dollar (USD) this week, slipping below the 1.3300 mark to a four-day low of 1.3230 before recovering slightly to 1.3289, reflecting a 0.28% decline. This movement comes as the US Dollar strengthens, fueled by positive economic data and easing concerns over trade tensions and Federal Reserve Chair Jerome Powell’s leadership stability. Investors appear to be recalibrating their positions, with market sentiment buoyed by signals of de-escalation in global trade disputes and robust US economic indicators.
A significant factor in the USD’s strength was the relief in markets following confirmation that US President Donald Trump has no plans to remove Federal Reserve Chair Jerome Powell. This assurance lifted risk appetite, boosting global equities and supporting the US Dollar’s rally. Powell’s continued tenure provides a sense of continuity in monetary policy, further bolstering investor confidence. Additionally, reports indicate the White House is contemplating reducing tariffs on Chinese imports, a move aimed at easing trade war tensions. This development has cheered traders, though the GBP/USD pair remains under pressure due to the renewed confidence in the American currency.
On the economic front, US Flash PMI data for April painted a mixed picture. Manufacturing activity showed improvement, with the Manufacturing PMI rising to 50.7 from 50.2, surpassing expectations of 49.4. However, the Services PMI weakened, dropping to 51.4 from 54.4. In contrast, UK PMI data highlighted ongoing challenges. The Manufacturing PMI remained in contraction at 44, down from 44.9, while the Services PMI fell sharply to 48.9 from 52.5, missing forecasts of 51.3. These figures underscore the economic divergence between the US and UK, contributing to the GBP’s struggles.
From a technical perspective, the GBP/USD pair’s uptrend is intact despite the recent dip below 1.3300. The Relative Strength Index (RSI) is trending toward neutral, suggesting that sellers are gaining traction. A daily close below the key support level of 1.3250 could pave the way for a test of the 50-day Simple Moving Average (SMA) at 1.3152. Conversely, if buyers push the pair above 1.3300, they could set their sights on the year-to-date high of 1.3423, recorded on April 22.
This week, the British Pound showed mixed performance against major currencies, with a notable 1.12% gain against the Swiss Franc but a 0.02% loss against the US Dollar. The interplay of economic data, trade policy developments, and market reactions to Powell’s confirmed position will likely continue to drive GBP/USD movements. Investors are advised to conduct thorough research and exercise caution, as trading foreign exchange carries significant risks, including the potential loss of principal.
