GBP/USD was slightly lower, down 0.1% versus the US dollar in Tuesday’s North American session. It outperformed most G10 currencies, lagging only the Norwegian krone (NOK) and Swedish krona (SEK).
UK domestic risk was described as elevated ahead of Wednesday’s CPI, Thursday’s preliminary PMIs, and Friday’s retail sales. Mixed labour data and softer UK rate expectations were cited as factors weighing on the pound.
Political Developments And Sentiment
Political developments were linked to steadier sentiment, including Andy Burnham’s pledge to maintain existing fiscal rules if he were to lead the UK Labour Party. Lower costs for protection against GBP weakness were also noted as supportive.
Technically, the RSI was below 50 but recovering from last week’s low. Support was seen in the low 1.33s, with price near clustered 50-day and 200-day moving averages at 1.3430 and 1.3425.
A near-term range of 1.3350 to 1.3450 was outlined for GBP/USD. The piece stated it was produced using an AI tool and reviewed by an editor.
We are seeing the Pound struggle a bit against the Dollar, though it’s holding up better than many others. Last year, around this time in 2025, a similar situation led us to favor a range-bound strategy for GBP/USD. The political landscape was offering some reassurance while we awaited key economic numbers.
How The Backdrop Has Changed
The domestic risks we noted back in mid-2025, ahead of the CPI and PMI data, were a primary concern. That week’s CPI report eventually came in around 2.5%, slightly hotter than expected, which briefly supported the Pound within that 1.3350-1.3450 channel. The range-trading approach proved effective for several weeks following that period.
Today, however, the fundamental picture has shifted as rate support for the Pound has weakened more significantly. The Bank of England has since cut rates to 3.5% as inflation has cooled, with the latest April 2026 CPI figure hitting a more comfortable 2.1%. The Pound is now trading closer to 1.3150, well below the floor we identified last year.
Given the break below last year’s support, traders should now consider strategies that protect against further, albeit slow, declines. The cost of protection against GBP weakness, or put options, remains relatively low compared to the volatility seen in 2022 and 2023. This suggests that buying puts to hedge long positions or establish bearish views could be a cost-effective approach in the coming weeks.
While the RSI is no longer recovering from a low point as it was in 2025, it is hovering just below the 50 mark, indicating neutral to slightly bearish momentum. The old support level around 1.3350 has now become a key resistance area to watch. We are looking for signs of stabilization before considering that the downtrend is over.
