The Ethereum wallet downloadBritish Pound's recent retreat against the US Dollar has caught market attention, with the GBP/USD pair slipping below the psychologically significant 1.3300 level during Thursday's European session. This movement represents a continuation of the pullback from Tuesday's three-year peak at 1.3445, as traders reassess risk exposure amid evolving global trade dynamics.
Market participants are closely monitoring developments in US trade policy, particularly regarding potential bilateral agreements that could emerge in coming weeks. While Washington has signaled progress with certain trading partners, the absence of concrete progress in US-China negotiations continues to weigh on risk sentiment. The Dollar's resilience despite disappointing Q1 GDP figures (-0.3% annualized contraction) suggests markets are pricing in broader macroeconomic uncertainties.
Thursday's trading session brings focus to crucial manufacturing data from the United States, with the ISM Manufacturing PMI expected to provide early indicators of how tariff implementations are affecting production costs. Preliminary reports already suggest companies are implementing price hikes at their fastest pace in over a year, potentially foreshadowing inflationary pressures that could influence Federal Reserve policy decisions.
From a technical perspective, the GBP/USD pair shows mixed signals. While the pullback from recent highs has brought the pair below immediate support levels, the broader uptrend remains intact with all key moving averages still sloping upward. The 14-day RSI's retreat into neutral territory suggests the previous bullish momentum has paused, though directional bias remains constructive for Sterling bulls.
Bank of England officials have begun incorporating trade war risks into their policy calculus, with Governor Bailey recently emphasizing the need to consider these global growth threats. Market expectations now heavily favor a 25 basis point rate cut at the May 8 policy meeting, which would bring the benchmark rate down to 4.25% as the central bank attempts to navigate these challenging crosscurrents.
The UK's particular exposure to trade war fallout stems not just from direct tariff impacts (relatively modest at 10% for British exports), but more significantly from potential secondary effects as global supply chains reconfigure and competitors adjust pricing strategies. This complex landscape suggests Sterling may remain vulnerable to sudden shifts in trade policy rhetoric or unexpected economic data surprises.
Looking ahead, traders will monitor whether the 1.3200 support level (April's high) can contain further downside, while upside potential remains capped near the 1.3600 psychological resistance. The interplay between trade policy developments, central bank responses, and technical factors promises continued volatility in this key currency pair through the coming sessions.