GBP/USD explores further upside as market sentiment rebounds after tariff delay

• GBP/USD rose back above 1.2800 on Wednesday as risk appetite roars back.
• The Trump administration delayed its own tariffs once again, sending markets soaring.
• Key US data still remains on the docket this week, with US CPI and PPI inflation, as well as consumer sentiment survey results.

GBP/USD tested higher on Wednesday, climbing back over the 1.2800 handle after broad-market sentiment recovered across the board. The Trump administration has once again pivoted away from its own "no exceptions, no delays" tariff policy, and has again delayed tariffs, this time for 90 days.

Global markets responded by widely surging, though bullish appetite remained limited for Cable, which rose a meager 0.3%. US President Donald Trump still has a 10% "reciprocal" tariff in place as the White House gives most of its trading partners time to negotiate out from tariff levels that were initially calculated by dividing imports by US exports, however the Trump administration has still raised tariffs on Chinese goods to 125% in a retaliatory move following China's own retaliatory tariff on US goods of 84%, which will impact US agriculture almost exclusively.

Rate markets have been pushed sharply off of their rate-cut perch, with rate swap traders now pricing in 75 bps of interest rate cuts from the Federal Reserve (Fed) through the remainder of the year. Rate markets are still betting that the next quarter-point cut will be delivered in June, however analysts from JPMorgan have warned that it is far more likely the Fed will be stuck in a wait-and-see cycle thanks to tariff uncertainty until at least September.

It's all about US data for the remainder of the trading 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.

GBP/USD price forecast

GBP/USD caught another bid on Wednesday, extending a thin bounce from the 200-day EMA just above 1.2700 and grasping for a second straight day of gains. Bullish momentum remains borderline anemic, but bidding pressure was just enough to keep Cable on the high side.

Bidders will still need to extend from the 200-day EMA before confirming a bullish recovery, but short momentum appears to have evaporated too quickly to allow fresh selling positions.

GBP/USD daily chart