GBP/USD saw a rise in North American trading on Thursday as risk sentiment improved amidst the ongoing trade tensions between the US and Europe. Interestingly, traders seemed to overlook some solid economic data from the US, which typically would have bolstered the US dollar (USD) but didn’t this time. Currently, the pair is at 1.1357, marking an increase of 0.24%.
Pound rises as trade war fears ease, overshadowing strong US economic indicators
On Wednesday, President Trump announced a deal with NATO regarding Greenland, indicating that he would not impose tariffs on eight European nations, thereby avoiding further escalation of trade conflicts.
In terms of economic performance, the U.S. Bureau of Economic Analysis reported a 4.4% year-over-year growth in GDP for the third quarter of 2025, surpassing the anticipated 4.3%. This growth is attributed to robust exports and a lesser impact from inventory adjustments.
Additionally, the Labor Department shared that fewer people filed for unemployment benefits last week. For the week ending January 17, new jobless claims rose to 200,000, slightly down from 199,000 the prior week and below the expected 212,000. Meanwhile, ongoing claims stood at 1.849 million, the lowest since November.
Following the data release, the US dollar index (DXY) dropped by 0.25% to 98.55. Traders continue to anticipate further rate cuts from the US Federal Reserve, with expectations pointing to approximately a 42 basis point reduction by year-end.
On the UK side, while there’s not much fresh economic data, earlier reports indicated rising inflation. However, the latest employment figures are expected to underperform economists’ forecasts, which might support a potential interest rate cut by the Bank of England.
Looking ahead this week, retail sales figures for December are anticipated from the UK, while in the US, the S&P Global Flash PMI and consumer sentiment data from the University of Michigan will be released.
GBP/USD Technical Analysis and Price Outlook
Despite touching a two-day high of 1.3475, GBP/USD is still trading within well-known bounds. While buyers seem to be gathering strength, as shown by the Relative Strength Index (RSI), the pair hasn’t yet exceeded its recent peaks.
If GBP/USD manages to break above the January 20 high of 1.3492, it could target the 1.3500 level, potentially encouraging further upward movement among buyers. Should those levels break, the next resistance would be at the January 6 high of 1.3567.
On the other hand, if GBP/USD dips below the 200-day Simple Moving Average (SMA) at 1.3406, the subsequent support level might be found at the 50-day SMA of 1.3341.
