GBP/USD extends backslide as safe haven trade resumes

• GBP/USD tumbled 1.2% on Monday, falling below 1.2750.
• Greenback safe haven flows have resumed after a brief pause.
• Investor sentiment continues to sour as Donald Trump threatens even more tariffs.

GBP/USD sank again on Monday, extending Cable into a second straight trading day of declines and pushing bids back down to the 200-day Exponential Moving Average (EMA) just north of 1.2700. After a brief reprieve, The US Dollar has resumed dominating risk-off flows, with deflating investor sentiment bolstering the Greenback across the board.

More tariffs? More tariffs.

After a tense week that saw the US pivot fully into a protectionist trade stance (but without the industry infrastructure to back it up), widespread import tariffs are on the books, with the US charging a flat 10% import tax on all goods from all countries, as well as widely-varied "reciprocal" tariffs that were derived by dividing US imports by US exports. After imposing an additional 34% tariff on Chinese goods, China clapped back with a retaliatory 34% tariff of its own on all goods bound from the US. Lacking any other means of problem-solving, the Trump administration has threatened to impose an additional 50% tariff on all Chinese goods, set to take effect on April 8.

Forex Today: Trump's tariffs remain in centre stage ahead of US CPI

US data once again comes front and center this week; US Consumer Price Index (CPI) inflation figures are slated for Thursday, with US Producer Price Index (PPI) inflation and University of Michigan (UoM) Consumer Sentiment Index survey results are both set to publish on Friday. This will be the last blast of key US inflation and sentiment figures from the 'pre-tariff' phase of 2025, marking a key measurement metric for the remainder of the calendar year.

According to the CME's FedWatch Tool, investors are piling back into bets that the Federal Reserve (Fed) will begin cutting interest rates to head off a recession. Rate markets are pricing in nearly 200 bps in interest rate cuts through the remainder of 2025, despite the Fed's ongoing middling policy speeches warning that trade uncertainty makes it harder, not easier, for the Fed to trim rates.

GBP/USD price forecast

GBP/USD has declined nearly 4% peak-to-trough from last week's peak bids just above the 1.3200 handle. A sharp rebalancing of market flows has dragged Cable back into the 200-day EMA, forcing bids back into a midrange that has plagued the pair for over two years.

Volatility is on the rise across the board, making technical levels difficult to identify. A rough resistance zone is priced in between 1.2900 and 1.3000, while the immediate technical floor is priced in from 1.2600.

GBP/USD daily chart