• The GBP/USD outlook suggests a solid bullish rally.
• Data revealed that the UK economy grew by 0.5%, well above estimates of a 0.1% expansion. 
• Trump escalated the trade war with China by hiking tariffs to 145%.

The GBP/USD outlook suggests a solid bullish rally as the pound gains on a mix of upbeat UK data and a weak dollar. Last week, an upbeat UK GDP report eased pressure on the Bank of England to cut rates, boosting the pound. At the same time, the dollar collapsed due to economic uncertainty amid Trump’s aggressive trade policy moves. 

The sterling gained on Friday after data revealed that the UK economy grew by 0.5%, well above estimates of a 0.1% expansion. The data indicated a stronger-than-expected economic rebound, leading to a decline in BoE rate cut expectations. For months, analysts have waited to see the economy recover. However, data had shown weak progress until the report on Friday.

Meanwhile, the dollar had a difficult week as Trump’s trade policy moves weighed on investor sentiment. At the same time, downbeat inflation data led to a surge in Fed rate cut expectations. 

Trump imposed punitive reciprocal tariffs on many countries before suspending them. However, he escalated the trade war with China by hiking tariffs to 145%. As a result, investors lost confidence in the administration, resulting in market turmoil. At the same time, US recession worries weighed on stocks and the dollar.
 

GBP/USD key events today

Market participants are not looking forward to any key releases from the US or the UK today. As a result, the price might extend last week’s trend. 
 

GBP/USD technical outlook: Bulls near the 1.3200 resistance

(Click on image to enlarge)

GBP/USD 4-hour chart

On the technical side, the GBP/USD price is quickly approaching the 1.3200 resistance level. It trades well above the 30-SMA with the RSI in the overbought region, suggesting a solid bullish bias. Bulls have had a strong lead that has allowed them to break above key resistance levels like 1.2880 and 1.3000. 

The steep rally has not had any significant pullback to the 30-SMA. Therefore, it might pause at the next resistance to allow bulls to rest. The 1.3200 resistance has previously stopped bulls, leading to a reversal. 

Consequently, bears might resurface at this level. However, the uptrend will continue if the price remains above the SMA and the RSI above 50. A break above the 1.3200 resistance will strengthen the bullish bias.

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