GBP/USD runs out of bullish gas at key technical levels

• GBP/USD briefly rose to a fresh 10-week high before receding.
• Market sentiment improved enough to bolster the Cable despite light data.
• Tariff threats have resumed from President Trump and now include Europe.

GBP/USD briefly tested a fresh 10-week high on Wednesday, piercing 1.2700 for the first time since mid-December. However, souring risk sentiment took hold during the US market session, dragging Cable back down into near-term consolidation and keeping the pair chained south of the 200-day Exponential Moving Average (EMA).

Always ready to seize an opportunity, President Trump issued fresh tariff threats on Wednesday, expanding his proposed import taxes to encompass a 25% tariff on European products. While specifics remain unclear, he revealed his plan to implement additional tariffs on European items, mentioning "cars and other things." He also reiterated his stance that the US does not "need" Canadian crude oil or lumber, confirming that tariff packages of 25% on both Canada and Mexico are forthcoming. However, he once again postponed the timeline by announcing that the confirmed tariffs on Canada and Mexico will now be effective starting April 2nd.

Forex Today: Markets' attention remains on US economy and tariffs

While the UK looks set to continue avoiding President Trump's vengeful gaze, the circle of countries that the White House isn't targeting with tariff threats is shrinking rapidly. If a full-blown trade war starts, the Pound Sterling could still see knock-on effects from global price increases.

UK data is notably limited this week, but there is plenty of US data for investors to chew on heading into the back half of the trading week. US Gross Domestic Product (GDP) growth figures for the fourth quarter of 2024 are due on Thursday, as well as an update to Durable Goods orders for January.

The key data print this week will be US Personal Consumption Expenditure (PCE) inflation due on Friday. US inflation metrics kicked higher at the start of 2025, and investors will be hoping for signs that a near-term flare up in inflation pressures will avoid trickling down to core inflation metrics.

GBP/USD price forecast

GBP/USD failed to chalk in a solid gain on Wednesday, pulling back from a new 10-week high and slumping back below the 200-day EMA at 1.2680. Bullish momentum has pinned Cable into the high end, but a near-term consolidation pattern is still baking into the technical chart. Technical oscillators have spent a worrying amount of time flashing overbought conditrions, and GBP/USD could be primed for a moderate pullback back below the 50-day EMA at 1.2532.

GBP/USD daily chart