The GBP/USD currency pair continues to trade above the critical 1.3500 level, reflecting relative strength in the British Pound (GBP) as the US Dollar (USD) remains pressured under the growing influence of the so-called “Sell America” trend.
During Wednesday’s Asian session, the pair ticked higher to around 1.3520, recovering slightly after posting mild losses in the previous trading day.
With multiple fundamental drivers in play, particularly surrounding US economic uncertainty, investors appear inclined toward non-dollar assets, giving sterling an edge for now. The topic is carefully unpacked in the article with the guidance of Raliplen’s brokers.
US Dollar Struggles Amid Rising Economic Uncertainty
One of the most significant factors behind recent USD weakness is the deepening economic uncertainty in the United States, fueled by a mix of geopolitical tensions, labor market dynamics, and unresolved trade disputes.
The term “Sell America” is increasingly being used by analysts to describe the trend of investors trimming their US-based holdings, especially as tariff threats and fiscal instability cast doubt on the sustainability of American economic momentum.
Although recent data, such as the Job Openings and Labor Turnover Survey (JOLTS), showed some resilience, reporting 7.39 million job openings for April versus the market expectation of 7.1 million, the upside surprise hasn’t been enough to lift sentiment toward the dollar.
Instead, traders are turning cautious, awaiting the next significant labor market gauge: the Nonfarm Payrolls (NFP) report for May. Economists anticipate the addition of 130,000 jobs, and any deviation from this number could fuel further volatility in the greenback.
BoE Governor Bailey Hints at Lower Interest Rates
On the UK side, the Bank of England (BoE) maintains a dovish stance, though without making any abrupt policy decisions. In the latest Monetary Policy Report Hearings, Governor Andrew Bailey reiterated that interest rates are likely to head lower, but emphasized that the central bank remains data-dependent.
Bailey also acknowledged the complexity of the current environment, especially amid increasing global trade tensions, which he believes may hurt investment flows and economic growth.
Interestingly, while the BoE’s tone is generally dovish, internal differences remain. The hearings exposed a lack of consensus among Monetary Policy Committee (MPC) members. Some policymakers fear that inflation could persist beyond expectations, justifying a more cautious approach.
Others argue that maintaining elevated rates could inflict more harm on growth, particularly if external shocks begin to materialize. For now, market participants are watching closely for UK inflation, wage growth, and GDP figures to gain clearer insight into the BoE’s next move.
GBP/USD Outlook: Bullish Bias Persists Amid Dollar Weakness
The GBP/USD exchange rate reflects a broader market narrative where risk sentiment, rate expectations, and macroeconomic divergences are in focus. While the dollar faces headwinds from growing trade instability and skepticism about fiscal stimulus sustainability, the pound benefits from relatively fewer uncertainties in the near term.
The 1.3500 threshold remains a psychological support level, and the pair’s ability to trade above it suggests that bullish momentum could continue, especially if the US data flow disappoints.
Additionally, the technical landscape offers further reasons for GBP/USD bulls to stay optimistic. Price action above 1.3500 places the pair firmly in a consolidation phase, with upside potential toward 1.3570 and 1.3600, provided momentum persists. However, a stronger-than-expected NFP print or hawkish remarks from Federal Reserve officials could temporarily limit gains.
US-China Trade Tensions: A Lingering Risk to the Dollar
Another persistent drag on USD sentiment stems from the fragile US-China trade relations. While the US President and the Chinese President were rumored to be planning a meeting to resolve their latest disputes, optimism faded after China’s Ministry of Commerce firmly denied claims that it had breached the tariff truce struck earlier in the month.
This continued back-and-forth fosters an environment of risk aversion, where investors begin diversifying away from US assets amid uncertain global trade prospects.
Given that tariffs directly affect supply chains, corporate investment, and consumer prices, any escalation in trade tensions would likely weigh on the dollar, especially if accompanied by signs of slowing economic growth.
For currency markets, this narrative tends to favor pairs like GBP/USD, which can benefit from a weaker dollar backdrop while capitalizing on relatively less turbulent domestic conditions in the UK.
Conclusion: Key Data and Geopolitics to Shape GBP/USD Path
To summarize, GBP/USD remains well-supported above 1.3500, with the dollar under broad selling pressure due to US-centric concerns, including a potential slowdown in hiring, rising trade tensions, and an increasingly divided monetary policy outlook.
Meanwhile, the pound is buoyed by cautious optimism, supported by BoE dovish guidance, yet not currently facing significant domestic shocks.
The upcoming Nonfarm Payrolls and further developments in US-China negotiations will likely determine the next directional bias for GBP/USD. However, as things stand, the combination of a resilient UK outlook and a shaky US environment continues to tilt the balance in favor of the pound, keeping GBP/USD bulls in control for the time being.
Investors and traders alike will need to stay alert to macroeconomic surprises and political developments that could quickly reshape this narrative.
