GBP – Safe-haven demand supports the dollar, while the pound is constrained by expectations of a rate cut next month.

Last week, the U.S. Supreme Court ruled that President Trump's tariffs, implemented under emergency powers, lacked congressional authorization. Trump subsequently stated he would proceed with a new 15% global tariff plan through other trade legal frameworks. This policy inconsistency exacerbated market concerns about the trade outlook and global growth, weakening the dollar. The dollar opened significantly lower on Monday but gradually recovered its losses from the European session. Renewed geopolitical tensions between the U.S. and Iran, and between Russia and Ukraine, dampened investor confidence, providing continued support for the dollar.

In the UK, data released last week showed that UK retail sales rose 1.8% month-on-month in January, far exceeding the previous month's 0.4% and market expectations of 0.2%; year-on-year growth was 4.5%, also exceeding expectations. Meanwhile, the S&P Global UK Composite Purchasing Managers' Index rose to 53.9 in February from 53.7 in January, the highest level since April 2024. The data indicates that UK consumer momentum remains resilient, providing support for the pound. However, previously released UK employment and inflation data supported expectations of a Bank of England rate cut next month, causing the pound to fall last week. The pound fell as low as 1.3433 against the dollar last week, reaching around 1.3480 at the close on Friday. It opened higher on Monday above 1.3530, but subsequently gradually fell back below 1.35.

The pound has been declining against the dollar this month, breaking below the bottom of a triangle pattern early last week, creating significant technical downward pressure. Any upward rebound is capped by the 50-day moving average. Furthermore, the 10-day moving average has just crossed below the 25-day moving average, indicating that the pound remains weak in the short to medium term. Support levels are expected to remain at 1.3430 and the January low of 1.3329, with further targets at 1.3170 and the 1.30 level. Resistance levels are seen at the 50-day moving average of 1.3540 and the 25-day moving average of 1.3615, with stronger resistance expected at 1.3720 and 1.3820.

Forecast Range:
Resistance: 1.3540 – 1.3615 - 1.3720 – 1.3820
Support: 1.3430 – 1.3329 – 1.3170 – 1.3000*

Key Focus:
Friday: UK GFK February Consumer Confidence Index (08:01)

Any questions? contact our professional analysis team