GBP/USD Rebounds as Risk Improves Ahead of UK Data

Key Moments

GBP/USD broke a three-day losing streak, edging 0.1% higher to trade near 1.3345 in Asian hours.
Risk appetite improved after US President Trump extended a pause on planned strikes on Iranian power facilities until April 6, 2026.
Markets are focused on UK February Retail Sales, with monthly activity projected to fall 0.8% after January’s 1.8% increase.

Risk-On Mood Lifts GBP/USD

The GBP/USD pair advanced on Friday, recovering from three consecutive sessions of declines and trading about 0.1% higher around 1.3345 during the Asian session. The move coincided with a broader improvement in risk sentiment, as investors reacted to developments surrounding planned US military action in the Middle East.

Market tone improved after United States President Donald Trump opted to extend a delay in scheduled attacks on Iranian power plants, a step that has been interpreted as a sign of possible de-escalation in regional tensions. The extended pause has provided some support to risk-sensitive assets, including the British Pound.

Middle East Tensions and Market Reaction

As of the time of writing, S&P 500 futures were up 0.3%, trading near 6,500, signaling stronger risk appetite among investors. At the same time, the US Dollar Index (DXY) was little changed, holding close to a three-day high around 100.00 against a basket of six major currencies.

Late Thursday, President Trump wrote on Truth.Social: “I am pausing the period of Energy Plant destruction by 10 Days to Monday, April 6, 2026, at 8 P.M., Eastern Time,” and indicated that discussions with Iran aimed at ending the Middle East war are progressing positively.

UK Retail Sales in Focus

In Friday’s trading, attention is turning to upcoming United Kingdom Retail Sales figures for February, due at 07:00 GMT. The data are expected to provide an updated read on consumer spending momentum in the UK economy.

On a month-on-month basis, Retail Sales are projected to decline 0.8%, following a 1.8% increase recorded in January. Year-on-year, the measure of consumer expenditure is anticipated to rise 2.1%, moderating from the previous 4.5% reading.

Indicator	Period	Previous	Expected
UK Retail Sales (MoM)	February	1.8%	-0.8%
UK Retail Sales (YoY)	February	4.5%	2.1%

GBP/USD Technical Landscape

At the time of writing, GBP/USD was trading near 1.3345. Despite Friday’s uptick, the short-term technical tone remains biased to the downside, as a pattern of lower highs continues to cap recovery attempts. The pair is hovering close to the 20-day Exponential Moving Average (EMA), which has flattened after a prior decline and is currently constraining the upside near the 1.34 area.

The 14-day Relative Strength Index (RSI) is fluctuating within the 40.00-60.00 band, indicating that while bearish momentum has stalled, the underlying negative bias has not yet been reversed.

Level	Type	Comment
1.3400	Resistance	20-day EMA, initial upside cap
1.3480	Resistance	March 23 high, recent supply zone
Mid-1.35 region	Resistance	Potential target if price closes above 1.3480
1.3257	Support	Monday’s low, first downside level
1.3220	Support	Next bearish objective below 1.3257
1.31 area	Support	Projected target if 1.3220 fails

A daily close above the March 23 high near 1.3480 would help ease prevailing downside pressure and could open the door to further gains toward the mid-1.35 band. On the other hand, a move below Monday’s low at 1.3257 would bring the next support at 1.3220 into view. A sustained break under 1.3220 would signal scope for a deeper decline toward the 1.31 area.

Pound Sterling: Key Characteristics

The Pound Sterling (GBP) is the official currency of the United Kingdom and is described as the world’s oldest currency, originating in 886 AD. It is presented as the fourth most traded currency in the global foreign exchange market, representing 12% of all FX turnover and averaging $630 billion in daily transactions, based on 2022 figures.

Major GBP currency pairs include GBP/USD, commonly called “Cable,” which accounts for 11% of FX trading, GBP/JPY, known among traders as the “Dragon” with a 3% share, and EUR/GBP, which represents 2% of trading activity. The currency is issued by the Bank of England (BoE).

Bank of England Policy and GBP

The article highlights monetary policy decisions by the Bank of England as the primary driver of Pound Sterling valuation. The BoE focuses on achieving “price stability,” defined as an inflation rate close to 2%. Its main policy instrument is the setting of interest rates.

When inflation is elevated, the BoE seeks to cool price pressures by raising interest rates, which makes borrowing more expensive for households and businesses. Higher rates are generally regarded as supportive for GBP because they can increase the attractiveness of UK-denominated assets for international investors.

Conversely, when inflation is too low and signals slowing economic growth, the BoE may consider cutting interest rates to lower borrowing costs and encourage businesses to invest in projects that support growth.

Macroeconomic Data and Trade Balance Effects

Macroeconomic indicators are also described as important inputs for Pound Sterling valuation. Releases such as Gross Domestic Product (GDP), Manufacturing and Services PMIs, and labor market data are used to assess the strength of the UK economy and can influence GBP direction.

Stronger-than-expected data typically supports GBP, as it may draw greater foreign investment and potentially increase the likelihood of BoE rate hikes. Weaker data, in contrast, tends to weigh on the currency.

The Trade Balance is cited as another significant gauge for GBP. This metric measures the gap between export revenues and import expenditures over a set period. When a country exports more than it imports, demand for its currency rises as foreign buyers need it to purchase goods, typically supporting the exchange rate. A positive Trade Balance is therefore viewed as currency-supportive, while a persistent deficit can have the opposite effect.