GBP/USD Hovers Near Key Resistance as Bullish Divergence Emerges

Summary:

The British Pound rose modestly on Friday, supported by upbeat UK GDP data and dovish-leaning commentary from Bank of England’s Greene.

BUY GBPUSD

Close Time

CLOSED

1.35600

Entry Price

1.37000

1.35000

1.35153 -0.00104 -0.08%

60.0

Pips

Loss

1.35000

1.34998

Exit Price

1.35600

Entry Price

1.37000

The British Pound remained marginally higher against the US Dollar during Friday's North American session, as investors digested a confluence of economic and geopolitical developments that have the potential to recalibrate central bank expectations and currency flows in the coming weeks.

Sterling initially touched a session high of 1.3581 before retracing slightly to trade around 1.3532 by the New York close, registering a mild 0.05% gain on the day. The move reflected cautious optimism following a report by The Wall Street Journal indicating that US President Donald Trump is granting Treasury Secretary Scott Bessent the authority to adjust technology export controls imposed on China. The development hints at a possible thaw in the ongoing trade standoff between the world’s two largest economies, a key geopolitical risk that has weighed heavily on market sentiment in recent months.

On the domestic front, the Pound drew support from stronger-than-expected UK economic data. Preliminary estimates for first-quarter 2025 GDP came in above consensus, highlighting the UK economy's resilience in the face of tightening monetary conditions and sluggish global demand. The positive data suggests the British economy may be more robust than previously anticipated, offering the BoE some breathing room as it charts the course for future interest rate policy.

Adding to the bullish case for the Pound was commentary from BoE Monetary Policy Committee member Megan Greene. Speaking on Friday, Greene noted that the disinflation process in the UK is progressing, with inflation expected to trend toward the central bank's 2% target over the medium term. Her remarks—although measured—were interpreted by markets as an early sign that the BoE may not be far from a potential policy pivot, particularly if inflation continues to ease in line with projections.

Across the Atlantic, US non-farm payrolls surprised to the upside, with 139,000 jobs added in May—beating economist expectations of 130,000. The unemployment rate held steady at 4.2%, reinforcing the narrative of a labor market that remains sturdy despite persistent headwinds from high interest rates and elevated inflation. However, underlying softness in wage growth and hours worked continues to signal that the broader economy is decelerating, albeit gradually.

This data set, while stronger than forecast, is unlikely to dramatically shift the Federal Reserve’s cautious stance in the near term. Market participants continue to expect the Fed to hold rates steady at its upcoming meeting, with rate cuts potentially on the table later in 2025 should inflation ease further and growth slow meaningfully.

Arguably the most market-sensitive headline of the day came not from an economic release, but from the geopolitical arena. According to reporting by The Wall Street Journal, President Trump is offering Treasury Secretary Bessent increased discretion over the administration's export control policy, particularly with regard to tech sales to China. This could mark a significant softening of Washington’s stance on Beijing, potentially reducing the risk of further escalation in the trade conflict that has plagued global markets.

Investors interpreted the news as a sign that the Trump administration may be seeking a more pragmatic approach ahead of the 2025 presidential election cycle, especially given rising concerns about inflation and global supply chain fragility. Equity markets reacted with cautious optimism, although major US indexes still closed the day in negative territory, weighed down by lingering uncertainties.

Next week promises to be a critical one for Sterling traders. On the UK side, upcoming government spending plans, BRC Retail Sales Monitor, labor market data, and trade balance figures will provide fresh insight into the strength of the economic recovery. These prints could significantly influence the BoE’s tone in upcoming communications, particularly if data surprises again to the upside.

In the US, the focus shifts to inflation metrics, with May CPI and PPI due midweek. Also on the docket are jobless claims and the University of Michigan’s Consumer Sentiment survey, which could offer more color on consumer confidence heading into the summer.

Technical Analysis

From a technical perspective, GBP/USD is trading just below the key resistance zone around 1.3585. The pair has managed to find short-term support at the 50-day Exponential Moving Average (EMA), reinforcing the prevailing bullish trend structure. A developing positive divergence on the Relative Strength Index (RSI)—especially after entering oversold territory—indicates that momentum may be building for a potential upside breakout.

Should the pair breach 1.3585 with sustained buying volume, it could pave the way for a rally toward 1.3660 and possibly beyond. Conversely, a failure to hold above 1.3500 would raise the risk of a near-term retracement, particularly if US inflation data surprises to the upside and revives hawkish Fed bets.

TRADE RECOMMENDATION

BUY GBPUSD

ENTRY PRICE: 1.3560

STOP LOSS: 1.3500

TAKE PROFIT: 1.3700

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GBP/USD Hovers Near Key Resistance as Bullish Divergence Emerges

Risk Disclosure