GBP/USD Rebounds From Trade War Scare – What's Next?Buy Monero with PayPal

The British pound staged a modest comeback against the US dollar this Tuesday, gaining 0.6% as market participants reassessed the likelihood of immediate trade restrictions. Earlier volatility had been triggered by protectionist rhetoric from Washington, though concrete policy actions continue to be postponed.

Three Critical Factors Influencing GBP/USD This Week

• Policy divergence: The Bank of England's anticipated rate cut on Thursday contrasts with the Fed's current pause, potentially widening yield differentials
• Employment data: Friday's US Non-Farm Payrolls report could shift dollar sentiment if figures deviate significantly from the 170K forecast
• Technical resistance: The 1.2500 psychological level and 50-day EMA continue to cap upward movements

Market attention has gradually shifted from geopolitical noise to fundamental indicators. While mid-tier data like the ISM Services PMI may cause minor fluctuations, traders are primarily positioning for Thursday's monetary policy announcement from Threadneedle Street.

Technical Outlook: Limited Upside Potential

Current price action near 1.2480 suggests the pair remains vulnerable to both bullish and bearish scenarios. A decisive break above 1.2500 could open the path toward 1.2700, where the 200-day EMA awaits. Conversely, failure to maintain current levels might see a retest of recent lows around 1.2100.

The MACD indicator's bullish crossover appears increasingly unconvincing as momentum falters near resistance levels. Market participants should watch for either confirmation of the current rebound or signs of exhaustion that could precede another downward leg.

Key Events to Watch

Wednesday brings the often-volatile ADP employment report, though its predictive value for Friday's official jobs data remains questionable. More significant will be the BoE's policy decision, where a 25 basis point cut has been largely priced in. The subsequent press conference may prove more market-moving than the decision itself, particularly regarding guidance about future policy direction.

Friday's NFP release represents the week's climax, with wage growth components likely to influence Fed policy expectations more than headline job creation figures. Currency markets may exhibit increased volatility as positions adjust ahead of the weekend.