- The GBP/USD outlook is extremely bullish after the dollar loses further due to Trump’s criticism of the Fed.
- Iran-Israel ceasefire continues to underpin the global risk sentiment.
- Markets are now eyeing the Q1 GDP and Core PCE Index data from the US.
The British pound extended its bullish momentum for the fourth consecutive session on Thursday, pushing the price to a fresh 41-month top near mid-1.3700. The rally stems from improving global risk sentiment and pressure on the US dollar driven by tension in Washington.
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The greenback is experiencing a broader sell-off after President Trump renewed his criticism of the Federal Reserve’s independence. Trump labeled Fed Chair Powell as “terrible” after his testimony before Congress, where he reiterated the data dependence and showed no urgency to lower the rates. The US President also hinted at replacing Powell as soon as this summer. The Dollar Index plunged below 97.50 as markets interpreted Trump’s threat as a political intervention with the central bank.
While the US side faces central bank politics and mixed economic data, the British pound shows resilience. Domestic concerns about a cooling labor market and softer inflation hopes are striking at the pound’s strength. A British Chamber of Commerce survey revealed that around one-third of SMEs plan to cut jobs due to rising National Insurance costs. BoE Governor Bailey also pointed out the softening of the labor market during his testimony earlier this week.
Nevertheless, the markets remain primarily focused on US dynamics and broader risk sentiment. The ceasefire between Iran and Israel has lifted the risk appetite and shifted capital flows off the US dollar. Traders are now eyeing today’s US Q1 GDP and Friday’s US Core PCE Index report. Softer-than-expected data may increase the odds of a September rate cut, which will further weaken the US dollar.
GBP/USD Technical Outlook: Bulls Aim for 1.4000
The 4-hour chart of the GBP/USD reveals a strong bullish trend as the price lies well above the key SMAs. The pair broke the resistance at 1.3635 with a strong push towards 1.3750. The price is building the case to test the 1.4000 psychological mark.
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On the other hand, the pair may experience profit-taking as it has overextended, and the RSI indicates an extreme overbought condition near the 80.0 level. The pair may test the resistance-turned-support at 1.3635 before resuming the uptrend.
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