The GBP has made gains against the USD, rising to approximately 1.3470 during Friday’s North American session. This recovery follows an initial decline earlier in the day, as the US Dollar gave up some of its gains due to a post made by US President Donald Trump on Truth.Social. In his post, Trump mentioned renewed trade tensions between the US and China, stating that China had violated its agreement with the US.
The DXY, which tracks the Greenback’s performance against six major currencies, also saw a drop, falling back to around 99.40 after an initial rise. This was triggered by the temporary halt of a federal trade court’s decision to block most of Trump’s tariffs, resulting in negative market sentiment and concerns over the potential impact of a trade war between the US and its top trading partners.
On Wednesday, a US trade court ordered permanent injunctions on tariffs related to fentanyl, border negligence, and reciprocal measures, accusing Trump of abusing the 1977 IEEPA (International Emergency Economic Powers Act) by invoking a “national emergency” for implementing tariff policies without congressional approval. However, the court’s ruling was temporarily halted due to the government’s appeal, with a deadline for plaintiffs to respond by June 5 and the administration by June 9.
Meanwhile, April’s US PCE data showed a slowdown in inflationary pressures, with the annual PCE inflation rate at 2.1%, below expectations of 2.2% and down from 2.3% in March. The core PCE inflation, which excludes volatile food and energy prices, rose by 2.5%, in line with estimates and down from 2.7% in the previous release.
The GBP has rebounded to near 1.3470 against the USD, supported by a key horizontal level from the high of September 26 at 1.3434, and is currently approaching the 1.3500 level. The pair remains bullish as the 20-day EMA continues to slope upwards around 1.3395.
However, the 14-day RSI is struggling to stay above 60.00, and a further drop into the 40.00-60.00 range could indicate a loss in bullish momentum. On the upside, the January 13, 2022, high of 1.3750 will be a major resistance level, while the 20-day EMA will act as a key support area on the downside.