- Despite the strength of the US dollar against other major currencies following signals of an imminent trade agreement between China and the United States, the British Pound is showing remarkable resilience against the US dollar's gains.
- At the beginning of trading this week, and across licensed currency trading company platforms, the GBP/USD pair is moving around the 1.3255 level at the time of writing this analysis, with its highest point being the 1.3298 resistance level.
- As is evident, the Pound is displaying strong resilience, as the trade deal between Britain and the United States will remain a positive factor for the strength of the currency pair.
Meanwhile, the GBP exchange rate is trading with positive momentum and is expected to continue its gains this week. Also, its gains come on the back of news that the United States and China have made progress towards a new trade agreement in weekend talks held in Geneva. This progress is crucial in boosting global investor confidence, which is a major driver for the British Pound. According to the latest developments, Chinese Vice Premier He Lifeng stated that the talks represent an "important first step" towards reaching a new trade agreement. He added, "Once announced, it will be good news for the world."
Overall, the signs of progress were not expected so quickly, given the significant deterioration in relations between the United States and China following President Donald Trump's imposition of large tariffs. Investors welcomed the progress made on Monday, which led to a rise in global stock markets amid "risk-on" trading.
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Trading Tips:
We still advise buying the Pound Sterling against the US dollar from every downward level, but without risk and while monitoring the factors affecting the performance of the currency pair.
Looking at the economic calendar, the United Kingdom releases highly important wage and employment data on Tuesday, which often triggers volatility. Wages are expected to remain high, preventing the Bank of England from accelerating the pace of interest rate cuts. The Bank provided a more cautious-than-expected assessment of its performance in the May Monetary Policy Report last week, defying expectations that it might have paved the way for another interest rate cut in June.
Technical Analysis for the GBP/USD pair today:
As clearly shown on the performance of the GBP/USD currency pair on the daily timeframe chart, the situation is neutral, with a balance between bear and bull control over the direction. Despite the recent selling, the 14-day Relative Strength Index (RSI) has not reached the midline, giving hope for sustained upward movement. However, the MACD indicator for the 12.26 closing is leaning downwards. Bear control over the Sterling against the US dollar will strengthen if it moves towards the support levels of 1.3190 and 1.3080, respectively. Conversely, over the same time frame, the 1.3400 resistance will remain the most important for bulls to control and prepare for stronger upward breakouts.
Decisively, we expect the pound to remain stable against the US dollar until markets and investors react to the announcement of US inflation figures, which will impact expectations for the future policies of the US Federal Reserve.
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