Key Moments:
- GBP/USD trades near 1.3400 in Thursday’s Asian session. It stays above the 20-day EMA at 1.3325, keeping a slight bullish tone.
- Meanwhile, doubts over the US-Iran ceasefire weigh on risk sentiment. S&P 500 futures fall 0.2% to 6,770, while the DXY edges up to 99.05.
- Looking ahead, traders focus on Friday’s US March CPI data. Forecasts point to 3.3% YoY, up from 2.4%.
Geopolitics Weigh on Risk Sentiment
The British Pound trades in a tight range near 1.3400 against the US Dollar during Thursday’s Asian session. The GBP/USD pair consolidates as geopolitical risks rise again.
Recently, markets questioned the US-Iran ceasefire announced on Wednesday. Ongoing Israeli strikes on Iran-backed Hezbollah targets in Lebanon have raised doubts.
Moreover, Iran’s parliament speaker and negotiator, Mohammad Bagher Qalibaf, criticized the US. In a post on X, he said it is “unreasonable” to continue ceasefire talks. He also claimed the US has already violated several terms.
As a result, fears of a prolonged Middle East conflict have returned. Risk assets face pressure. S&P 500 futures drop 0.2% to 6,770. At the same time, the US Dollar Index (DXY) rises slightly toward 99.05.
Macro Focus: US Inflation Data in View
Attention now shifts to US inflation data. The March Consumer Price Index (CPI) report will be released on Friday.
Markets expect headline CPI to rise to 3.3% YoY, up from 2.4%. If confirmed, this increase could shape expectations for US interest rates.
Consequently, the data may drive short-term moves in both the US Dollar and GBP/USD.
GBP/USD Technical Landscape
GBP/USD moves sideways near 1.3400 in Asian trading. However, the pair keeps a mildly bullish bias. It remains above the 20-day Exponential Moving Average at 1.3325.
This level now acts as key support. If prices dip, buyers may step in near this zone.
In addition, momentum indicators support the outlook. The 14-day Relative Strength Index (RSI) sits near 54. This reading signals modest bullish momentum.
| Indicator / Level | Value | Implication |
|---|---|---|
| Spot GBP/USD | Around 1.3400 | Sideways movement |
| 20-day EMA | 1.3325 | Key support level |
| 14-day RSI | Near 54 | Moderate bullish momentum |
| Immediate support | 1.3325 | Break below weakens outlook |
On the downside, the 20-day EMA at 1.3325 provides initial support. A break below this level would weaken the bullish view. It could also trigger a deeper pullback.
On the upside, resistance may appear near recent swing highs. For now, the trend favors buyers while price holds above support.
US Dollar Overview
The US Dollar is the official currency of the United States. It also serves as a global reserve currency. In fact, it dominates global trade and finance.
According to recent data, the USD accounts for about 88% of global forex turnover. After World War II, it replaced the British Pound as the leading reserve currency.
Previously, the Dollar was backed by gold. However, this changed after the Bretton Woods system ended in 1971.
How Fed Decisions Affect the US Dollar
The Federal Reserve drives the value of the US Dollar. It focuses on price stability and full employment.
To meet these goals, the Fed adjusts interest rates. When inflation rises, the Fed often hikes rates. This move typically supports the Dollar.
In contrast, the Fed cuts rates when growth slows or unemployment rises. As a result, the Dollar may weaken.
Quantitative Easing and Its Impact on USD
In extreme cases, the Fed uses quantitative easing (QE). This policy increases liquidity in the financial system.
Under QE, the Fed creates money and buys government bonds. This action boosts lending and supports markets.
However, QE usually weakens the US Dollar over time.
Quantitative Tightening and the Dollar
Quantitative tightening (QT) is the opposite of QE. Under QT, the Fed reduces its balance sheet.
It stops buying bonds and allows existing holdings to mature. As a result, liquidity declines.
This process often supports the US Dollar.
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