GBP/USD shrugs off tariff fears as Pound continues to recover ground

• GBP/USD rose 0.5% on Tuesday, retesting multi-month highs.
• UK economic data remains tepid this week, US data and trade policies remain in focus.
• Cable touches new 18-week high as recovery mode continues.

GBP/USD extended its recent bullish rally on Tuesday, shrugging off ongoing trade war concerns that are weighing down American market centers. Cable rose a little over one-half of one percent, clipping into the 1.2950 level for the first time in 18 weeks.

US data remains the focal point for GBP/USD traders. UK economic data remains extremely limited on the data docket this week, but key US data releases are lined up one after another throughout most of this week. The US JOLTS job openings data was a bit stronger than anticipated, offering some stability to shaken markets. Job postings rose to 7.74M in January, exceeding the forecast of 7.63M and up from December's revised figure of 7.51M, adjusted down from 7.6M.

US Consumer Price Index (CPI) inflation metrics for February are front-and-center on Wednesday. Markets are overwhelmingly hoping for a lower print for February after an unexpected uptick in consumer-level inflation in January shattered hopes for a quick return to a rate cutting schedule from the Federal Reserve (Fed) in 2025. Headline CPI inflation is expected to tick down to 2.9% from 3.0% YoY.

US Producer Price Index (PPI) inflation is slated for Thursday. While markets are hoping for an easing inflation outlook in consumer inflation, business-level inflation is expected to remain stubbornly high with core PPI inflation forecast to hold steady at 3.6% YoY.

Friday will close out with University of Michigan Consumer Sentiment Index figures for March, as well as the UoM's Consumer Inflation Expectations. The UoM sentiment index is forecast to tick down slightly to 63.4 from 64.7 as the US's economic outlook deteriorates in the face of Donald Trump's insistence on trying to spark a global trade war with everybody at the same time.

GBP/USD price forecast

GBP/USD is testing into its second straight week of gains as the pair tests into fresh 18-week highs near 1.2950. The 1.3000 major price handle could cap off any further bullish gains as the key handle last served as a significant consolidation level in October and November of 2024.

For now, momentum is squarely in the hands of bidders, but technical oscillators have been pinned in overbought territory since January, and a quick turnaround could be on the cards soon.

GBP/USD daily chart