GBP/USD crashes over 100 pips below 1.28 as trade war escalates

• GBP/USD pukes as US tariffs spark fears of a recession.
• Sterling also falls as investors increase the chances of a BoE cut in May.
• Traders are eyeing Fed's minutes and US CPI data.

The Pound Sterling plunges over 100 pips or 0.90% against the Greenback at the beginning of the week, driven by recession fears and hopes cut short that the White House could reconsider their position in trade policies over the weekend. The GBP/USD trades at 1.2763 after hitting a daily high of 1.2933.

GBP/USD sinks to 1.2763 as risk aversion return due to fake tariff pause headlines

Risk aversion keeps the Greenback bid on Monday. News that the White House is mulling a 90-day pause in tariffs for all nations except China, revealed by US advisor Hassett, triggered a recovery in the GBP/USD, which was short-lived, as Trump revealed that he "did not say this." Additionally, CNBC revealed that it was "fake news."

Uncertainty keeps traders uneasy as US stocks have turned green recently. In the FX space, safe-haven peers are leading the gains, although traders should be aware that equities are also recovering.

Aside from this, data remains in the backseat with a scarce economic docket in the UK. Nevertheless, traders ramped up their bets that the Bank of England (BoE) would cut rates by 25 basis points in May.

Source: Prime Market Terminal

Across the pond, the US economic calendar is absent, yet traders are awaiting the release of the latest Federal Open Market Committee (FOMC) minutes and inflation data.

The Consumer Price Index (CPI) is expected to decrease from 2.8% to 2.6% year-over-year (YoY). Core CPI is projected to dip from 3.1% to 3%. An upward surprise in the data could deepen the global stocks' rout, after Fed Chair Powell revealed last Friday the US central bank is in no rush to reduce borrowing costs.

GBP/USD Price Forecast: Technical outlook

The GBP/USD has cleared the 200-day Simple Moving Average (SMA) of 1.2810 and is aiming to challenge the 50-day SMA at 1.2730. If surpassed, the next target would be the 1.2700 mark, followed by the 100-day Simple Moving Average (SMA) at 1.2627. In the surprising case of Sterling's recovery, the first resistance would be 1.2800, followed by the 200-day SMA. Further upside is seen at 1.2900.