FX.co ★ Emilly | GBP/USD

The British pound (GBP) exhibited a positive performance and is poised to conclude the month of April on an upward note, having appreciated by 0.65% against the US dollar. This gain was primarily fueled by the sustained weakness of the US dollar and an overall improvement in risk appetite across global markets. As the trading day progressed, the GBP/USD pair recovered significantly from its daily low of 1.3279 and was observed trading near the 1.3400 level at the time of this report. The economic data flow from the United States was relatively sparse, and officials from the Federal Reserve entered a customary quiet period in advance of their upcoming monetary policy meeting in May. Consequently, market participants shifted their focus towards the release of British economic indicators. Notably, the Confederation of British Industry (CBI) reported that retail sales in the UK remained negative in April; however, there was a significant improvement from a deeply negative reading of -41 in March to -8 in April. This marked the highest value for the CBI retail sales index since October, signaling a potential stabilization or nascent recovery in the retail sector. The British pound's upward movement was also supported by evolving expectations regarding the Bank of England's (BoE) monetary policy stance. There is a growing sentiment that the BoE may not adopt as lenient an approach as previously anticipated. Current market pricing of interest rate probabilities indicates that participants now expect a reduction in UK interest rates by approximately 87 basis points by the end of the current year. Interestingly, on the other side of the Atlantic, the Federal Reserve is expected to implement a slightly larger interest rate reduction of around 88 basis points over the same period. This differential in anticipated monetary policy easing suggests that the GBP/USD pair could experience further upward pressure as investors become less concerned about the dollar's prospects and more focused on the relative resilience of the British economy.

Analysts at Parkliz have expressed an optimistic outlook for the pound sterling, particularly in its performance against the euro. They argue that "the UK's ability to withstand direct customs tariffs is greater than the euro area, which implies less damage to demand, thereby offsetting the impact caused by limited fiscal space." This perspective suggests that the UK economy may be better positioned to weather potential trade disruptions compared to the Eurozone. Looking ahead to the economic agenda for the current week, the UK will primarily focus on the release of housing price data. In contrast, traders in the United States will be closely monitoring a series of key economic indicators, including the first-quarter GDP growth figures for 2025, the Personal Consumption Expenditures (PCE) price index (which is closely watched by the Federal Reserve as a measure of inflation), the ISM Manufacturing Purchasing Managers' Index (PMI), and the non-farm payrolls data for April, which will provide insights into the US labor market. From a technical standpoint, the GBP/USD pair remains in an overall upward trajectory, despite encountering some difficulty in decisively breaching its year-to-date (YTD) high of 1.3423. A sustained break above this level could open the door for further gains towards the 1.3450 mark and potentially challenge the 1.3500 level. Conversely, if the pair experiences a pullback and breaks below the 1.3400 level, the next immediate support would likely be found at 1.3350, followed by the 50-day simple moving average (SMA), currently situated around 1.3273. The ability of buyers to overcome the YTD high will be crucial in determining the strength and sustainability of the current bullish trend in the GBP/USD pair.