The British pound has reached another three-year peak against the US dollar, stabilising around 1.3400.
Key factors driving GBP/USD strength
Sterling is closing April with its strongest monthly performance since November 2023, gaining over 3% against the US dollar.
Two key factors support the pound’s resilience:
- Monetary policy divergence – Markets expect the Bank of England (BoE) to slow the pace of interest rate cuts compared to other central banks. Current projections suggest the BoE will reduce rates by 85 basis points in 2025, roughly in line with expectations for the US Federal Reserve.
- Dollar alternatives in demand – Investors seek alternatives to the US dollar, and the UK appears less vulnerable to US tariff risks. A 90-day moratorium on increased US tariffs expires in late July, renewing global economic uncertainties.
Against this backdrop, the UK and its currency appear more stable than many peers.
Technical analysis: GBP/USD
H4 chart
- GBP/USD continues to consolidate around 1.3344, with the range now extending to 1.3440.
- A downside retest of 1.3344 is expected, followed by potential upward momentum towards 1.3455, defining the range boundaries.
- A break below consolidation could trigger a downward wave targeting 1.3080 as the initial objective.
- The MACD indicator supports this outlook, with its signal line above zero but poised for a decline.
H1 chart
- The pair has broken above 1.3344, achieving a local target at 1.3440
- A corrective decline towards 1.3344 is anticipated before potential renewed growth towards 1.3455
- The Stochastic oscillator aligns with this scenario, with its signal line below 20 and primed for an upward move towards 80
Conclusion
The pound remains defensive yet strong, buoyed by relative monetary policy stability and its appeal as a dollar alternative. Technically, the pair is testing key levels, with further direction contingent on consolidation breaks.
