GBP/USD Rises to 1.34 on USD Weakness in the Sell America Trade
The GBP/USD pair has been on an impressive winning streak, rising for 11 consecutive sessions and reaching above the 1.34 mark. This surge represents an astonishing 11% increase since mid-January, marking one of the longest winning streaks in recent years.
The Pound’s Strength
- The pound has climbed to its highest level since September last year, defying expectations of a rate cut by the Bank of England amidst economic uncertainty due to Trump’s trade tariffs.
- The recent strength of the pound can be attributed to the weakness of the US dollar in the sell-America trade scenario.
Although the UK economic calendar is relatively quiet this week, with data scheduled for tomorrow and Friday, the pound continues to maintain its upward momentum.
Conversely, the US dollar has fallen to a fresh three-year low against its major counterparts, following President Trump’s calls for interest rate cuts and concerns over Fed independence as he criticizes Fed Chair Powell’s stance on rates.
The recent verbal assault by President Trump on Fed Chair Powell has sparked fears in the market that Trump may consider firing the central bank chief. Such uncertainty has created a cautious atmosphere among investors.
Meanwhile, US stocks witnessed a significant sell-off yesterday as investors shied away from US-related assets.
While the US economic calendar remains quiet today, market participants will closely monitor five Fed speakers to gauge their response to the ongoing political tension.
GBP/USD Forecast – Technical Analysis
Technical analysis of the GBP/USD pair reveals that it is trading within an ascending channel established at the beginning of the year. With the price reaching 1.34, just below the September 2024 high and the upper band of the rising channel, the RSI indicates overbought conditions, suggesting a potential period of consolidation. Traders will closely watch the 1.3430 level for a possible double top reversal pattern.
If the pair breaks above 1.3430, the focus will shift to the 1.35 round number, followed by 1.3750, the high from 2022. On the downside, support levels are seen at 1.33 and 1.32.
DAX Falls as Trump Attacks Powell, Impacting Risk Sentiment
The DAX, along with other European indices, is experiencing a decline post the Easter weekend, as President Trump continues his criticism of Federal Reserve Chair Jerome Powell, demanding rate cuts.
Trump’s comments have created uncertainty in the precious metals and equity markets, leading to a sharp decline in US stocks on Monday. The S&P dropped by 2.5%, triggering a risk-off sentiment that spilled over into European markets.
The global equity markets are vulnerable to the negative sentiment emanating from the US, with gold prices surging to a record high above $3500.
With a focus on economic data, attention will be on consumer sentiment, which is expected to deteriorate further in April amid trade tariff uncertainties. The ECB’s recent rate cut and the potential for further cuts in June underscore the challenges to the economic outlook.
DAX Forecast – Technical Analysis
After recovering from the 2025 low of 18,800, the DAX has managed to surpass 21,000 but faces resistance at the falling trendline from the mid-March high, the 100 SMA, and the April 9 peak around 21,500. Buyers need to break above this resistance zone to aim for 22,000.
If the DAX fails to breach the resistance zone, a retest of 20,675, the weekly low, and potentially 20,450 could be on the cards. Lower levels to watch include the 200 SMA at 21,157 and 20,000.
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