The British pound weakened against the US dollar on Thursday, losing 0.25% to trade near 1.3525 after briefly falling below 1.3550. The decline erased Wednesday’s advance toward 1.3600, as selling pressure persisted through both European and North American sessions.
Mixed UK data fails to lift the pound
Fresh UK economic data for February offered a conflicting picture:
- Gross domestic product rose 0.5% month-on-month (forecast 0.1%)
- Index of services also climbed 0.5% (forecast 0.3%)
- Manufacturing production fell 0.1% on the month and 0.5% year-on-year, both weaker than expected
- Industrial production declined 0.4% year-on-year, a smaller drop than the 0.9% fall forecast
The stronger GDP and services figures were undermined by softer manufacturing and industrial output, limiting upside momentum in the pound. The data landed ahead of two scheduled speeches from Bank of England policymaker Taylor, keeping the market cautious.
The IMF has recently highlighted the UK as the most exposed G7 economy to the current energy shock, projecting a cumulative hit of 0.7 percentage points to GDP through 2027. This backdrop helps explain why the pound has struggled to hold gains after reaching a two-month high near 1.3600.
Dollar supported by Middle East tensions and US data
In the US, developments in the Middle East and stronger domestic numbers continued to underpin the dollar.
The US president reported progress toward a deal with Iran to end the ongoing conflict and cited talks on a potential Israel-Lebanon ceasefire. However, market participants remained doubtful about how close any comprehensive agreement might be.
Later Thursday, that optimism partially materialized as President Trump announced a 10-day ceasefire between Israel and Lebanon, due to start at midnight. The agreement followed the first direct talks between the two sides since 1993, held in Washington and described as productive.
Even so, tensions around Iran persist. A separate, fragile ceasefire brokered by Pakistan is set to expire on April 22, with no date confirmed for further negotiations. A US-backed naval blockade on Iranian ports remains in force, sharply curbing traffic through the Strait of Hormuz. Daily vessel crossings there have fallen from roughly 130 to just a handful, fueling concerns about global energy supplies.
These disruptions are feeding into inflation:
- US gasoline prices jumped 21.2% in March
- The surge contributed heavily to a 3.3% annual rise in the consumer price index
At the same time, US labor data remain firm, with initial jobless claims falling to 207,000 last week. The combination of persistent price pressures and solid employment reduces the likelihood of near-term Federal Reserve rate cuts, keeping the dollar attractive as a safe-haven currency.
Intraday technical picture: downside bias in GBP/USD
On intraday charts, GBP/USD traded around 1.3525, below the opening level of 1.3571 and maintaining a mildly negative tone.
Key intraday levels
- Immediate resistance: 1.3571 (day’s opening level)
- First support: 1.3520
- Psychological level: 1.3500
Technical indicators add to the cautious view. The stochastic RSI around 46.19 suggests fading upside momentum and a risk of renewed losses if the pair cannot reclaim 1.3571. A clear break below 1.3520 would put 1.3500 in focus, where short-term buyers could attempt to stabilize the market. Only a sustained move above 1.3571 would ease near-term downside pressure.
Price action also points to a short-term correction, with charts signaling a possible test of 1.3450 in coming sessions. Failure to hold that area would shift attention to a cluster of simple moving averages near 1.3427, a zone that may provide a more robust floor.
Daily trend: uptrend intact but momentum stretched
On the daily timeframe, GBP/USD hovered around 1.3526, still above key moving averages:
- 50-day exponential moving average: 1.3412
- 200-day exponential moving average: 1.3354
This alignment keeps the broader upward structure in place. However, an elevated stochastic RSI reading near 94.6 suggests that bullish momentum is stretched and vulnerable to a pause or pullback.
Key medium-term levels
- Major supports: 1.3412 (50-day EMA) and 1.3354 (200-day EMA)
- A pullback holding above these levels would likely be corrective within the prevailing uptrend
- A daily close below both would threaten the broader bullish pattern
Outlook: geopolitics and energy remain in control
The clash between tentative diplomatic progress and unresolved tensions in the Middle East continues to drive global risk sentiment. Ceasefire headlines offer brief relief, but the ongoing Hormuz disruption and the impact on energy prices remain central.
For the UK, external energy shocks are hitting an already fragile growth outlook. For the US, higher energy costs are feeding into inflation at a time when domestic data stay resilient, bolstering the case for higher-for-longer rates and supporting the dollar.
In this environment, currency markets remain highly sensitive to:
- Any firm agreement that reopens key trade routes, which could erode a major source of dollar strength
- Any breakdown in talks, which could quickly revive safe-haven demand and pressure the pound further
Near term, the technical setup points to further softness in GBP/USD unless the pair can regain and hold above 1.3571. A move toward 1.3450–1.3427 would not yet break the broader uptrend, but a sustained drop below the main moving averages would mark a shift in the medium-term picture.
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