GBP/USD remains underpinned above the key 1.3550 mark in early European trading on Thursday. This steadying effect follows many small democratic gains achieved on Wednesday. The currency pair’s recent performance reflects cautious optimism, despite facing obstacles stemming from disappointing economic indicators and rising tariff uncertainties.
Early Thursday, GBP/USD retraced some of its recent gains at the time of writing during the Asian hours, currently around 1.3550. This level has proved vital to the duo, with market participants monitoring for continued bullish action. According to analysts, a stronger breakthrough of the resistance zone around 1.3590 – 1.3600 may be important for GBP/USD. This move could result in even larger gains in the shorter term.
Economic Indicators Influence Market Sentiment
The recent bullish price action for GBP/USD follows a string of mixed economic data. Coming on the heels of a hugely disappointing private sector employment report on Wednesday that found just 37,000 jobs created in May. This abysmal growth level created tremendous downward pressure on the USD. While this is an objectively underwhelming figure, it has curbed the risk sentiment surrounding the Greenback. Currently, investors are re-evaluating growth expectations for the U.S. economy.
As market participants hang on the heels of Friday’s much-anticipated Nonfarm Payrolls data, Liverpool-Ukraine doom scroll pace default. The weak employment reading has led to worries about the economy’s underlying strength. Accordingly, many foreign exchange markets are beginning to wonder how much longer the USD can stay elevated.
Compare that to the British Pound, which has remained surprisingly strong. There has not been very good positive economic news coming out of the UK. Nonetheless, GBP/USD has definitively managed to hold above the 1.3550 region. This stability indicates that traders are starting to set themselves up for movement in the upward direction if overall market conditions turn more favorable.
Tariff Uncertainties Weigh on Growth Prospects
Compounding this challenge in today’s market is the increasing uncertainty around tariffs. These ongoing geopolitical tensions pose serious risks to global trade and growth, both directly and as a drag on the U.S. economy itself. As worries grow that these tariff troubles may severely impede economic growth, resulting risk appetite among investors has been lowered.
All of this change in sentiment has conspired to put downward pressure on the Greenback. With traders increasingly wary of how tariff-related disruptions could affect corporate profits and consumer spending, the USD is facing challenges that could limit its upside potential. GBP/USD still remains able to remain above 1.3550. This could suggest a more general trend towards currencies perceived to be less susceptible to external shocks.
Traders Eye Resistance Levels
Looking to the future, traders are waiting to see if key resistance levels hold strong for GBP/USD. The zone between 1.3590 and 1.3600 is very important. If price action convincingly breaks above this region, it would be a bullish signal for the pair in the near term. Traders are still nervous, particularly with key economic data ahead.
Investors were waiting with bated breath for the upcoming Nonfarm Payrolls report. This report is especially important as it could influence Federal Reserve policy making decisions and impact USD pricing. If the report were to show more jobs added than previously anticipated, that could help increase confidence in the Greenback and push GBP/USD’s current sentiment back on course.