GBP/USD Struggles Near 1.3500 as Trade Tensions and Strong USD Weigh on Sterling

GBP/USD Struggles Near 1.3500 as Trade War Fears Weigh on Sterling

Narrow Trading Ahead of Key Risk Events

The GBP/USD pair remains under pressure on Monday, consolidating around the 1.3500 psychological level, just above its three-week low from Friday. Despite a slight pullback in the US Dollar (USD), Sterling's upside remains capped due to ongoing macroeconomic and geopolitical risks.

See Also: Forex Pair Outlooks This Week

Fed Policy Outlook and Trade War Bolster Dollar Strength

The Greenback remains broadly supported as expectations for a Federal Reserve rate cut continue to fade. The hawkish shift is largely due to concerns that Trump’s aggressive trade tariffs, including a 30% levy on EU and Mexican goods and 50% on copper, may trigger inflationary pressures.

Risk-off flows across global markets are further fueling demand for the USD as a safe-haven asset.

Weak UK GDP Supports August BoE Rate Cut Odds

Sterling also suffers from renewed downside pressure after UK GDP data disappointed on Friday, reinforcing expectations for a Bank of England (BoE) rate cut in August. This macro weakness adds to the GBP’s vulnerability, particularly in an environment where the Fed is likely to stay on hold.

🇬🇧 Related: What the Latest UK GDP Means for the BoE

Technical Outlook: Bearish Bias Intact Below 1.3550

The technical picture suggests continued bearish momentum below 1.3550, with potential downside targets near 1.3420 if risk sentiment continues to deteriorate.

Conclusion: GBP/USD Remains Vulnerable

Until clarity emerges around US trade policy and BoE monetary direction, GBP/USD is likely to remain range-bound with a bearish tilt, especially amid growing global risk aversion.