• The GBP/USD outlook points north as the pound gains against a weaker dollar.
• The UK composite PMI increased from 48.5 to 49.4.
• Fiscal health concerns weighed on the dollar, allowing its peers to climb.

The GBP/USD outlook points north as the pound gains against a weaker dollar. Moreover, an improvement in UK business activity in April continued the trend of upbeat data in the country. The greenback remained fragile as US fiscal health concerns weighed. 

The pound gained on Friday after data in the previous session revealed an improvement in UK business activity. The composite PMI increased from 48.5 to 49.4. Although it remained in contraction, there was an improvement that boosted investor optimism. Earlier in the week, inflation figures came in well above estimates, easing pressure on the BoE to lower borrowing costs. 

The pound also strengthened as relations between the country and its major trading partners improved. Britain was the first to sign a trade deal with the US. Moreover, the country has reset trade and defense ties with Europe.

On the other hand, fiscal health concerns weighed on the dollar, allowing its peers to climb. Since Moody’s downgraded the US government’s credit rating, investor confidence has plunged. Additionally, Trump’s tax bill passed through the House of Representatives. The bill will add to fiscal concerns by increasing the US’s debt burden. 

However, data showed improving business activity in the US, easing pressure on the Fed to lower borrowing costs. The economy has remained resilient despite Trump’s tariffs. However, policymakers will likely remain cautious.

GBP/USD key events today

• UK retail sales m/m
   

GBP/USD technical outlook: Bulls find their feet after range breakout

(Click on image to enlarge)

GBP/USD 4-hour chart

On the technical side, the GBP/USD price is bouncing higher after retesting a recent breakout level. The price trades above the 30-SMA and the RSI is nearing the overbought region, suggesting a solid bullish bias. 

GBP/USD was caught in a range between the 1.3251 support and the 1.3401 resistance. During this consolidation, there were many failed attempts to break out and start trending. However, the most recent one looks promising. 

Bulls pushed the price beyond the range resistance level, pulled back to retest it, and are now seeking new highs. The next target is at the 1.3500 key psychological level. A break above this level will further confirm an uptrend, strengthening the bullish bias.

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