empty
05.06.2025 03:52 AM
GBP/USD Overview – June 5: Britain Is America's Best Friend, but Still Has to Pay

This image is no longer relevant

The GBP/USD currency pair traded rather calmly on Wednesday, as there were few important events and reports during the day. As we expected, the business activity indices (excluding ISM) and the ADP report had almost no effect on trading. Most of the information received during the day related more to the general fundamental background on which the market builds long-term strategies.

So, on Wednesday, it became known that Trump increased tariffs on steel and aluminum for the whole world by 50%. Recall that the U.S. President had already announced this decision over the weekend, so the market had priced in this news with dollar sales on Monday. Yesterday's formal imposition of tariffs did not cause much reaction. At the same time, it was revealed that the new tariffs would apply to all countries except the United Kingdom. The White House stated that Britain would receive special treatment because of the Economic Prosperity Agreement signed between the two countries on May 8. Thus, for the UK, tariffs on steel and aluminum remain at 25%.

However, Trump's representatives indirectly confirmed that a full-fledged trade deal between London and Washington has not been finalized or signed. Washington stated that negotiations with British counterparts would continue until July 9, and tariffs could still be raised for the UK if the negotiation process fails. On the other hand, London declared its intention to achieve the complete removal of tariffs.

Frankly, the deal with London is the only one that seems more or less realistic. While the agreement hasn't been finalized yet, Trump has already announced a deal multiple times, and it appears that London and Washington will eventually reach an agreement.

What does this mean for the pound and the dollar?

For the dollar, a trade deal with the UK (not the largest U.S. trading partner) won't make much of a difference. The dollar needs tariff reductions in conflicts with the EU and China to truly rally. For the British pound, however, it's another opportunity to continue strengthening against the dollar.

The British economy still doesn't show high growth rates, and Trump's tariffs could hurt it. Therefore, if Britain avoids the fate of other countries, its economy at least won't be under the pressure of tariffs, unlike others. Why wouldn't the market continue to invest in the pound?

From a technical perspective, the GBP/USD pair remains near its local and three-year highs and still shows no strong desire to correct. Thus, the British currency could show a new "surge" at any moment. If the U.S. labor market and unemployment data disappoint, we might see that surge this week.

This image is no longer relevant

The average volatility of the GBP/USD pair over the last five trading days stands at 82 pips, which is considered "moderate" for this pair. Therefore, on Thursday, June 5, we expect the pair to move within the range limited by 1.3480 and 1.3644. The long-term regression channel points upward, indicating a clear uptrend. The CCI indicator has not entered extreme zones recently.

Nearest Support Levels:

S1 – 1.3550

S2 – 1.3428

S3 – 1.3306

Nearest Resistance Levels:

R1 – 1.3672

R2 – 1.3794

R3 – 1.3916

Trading Recommendations:

The GBP/USD pair maintains its uptrend and continues to grow. There is plenty of news supporting this movement. The de-escalation of the trade conflict started and ended quickly, but the market's hostility toward the dollar remains. Every new decision by Trump or related to Trump is perceived negatively by the market. Therefore, long positions are possible with targets at 1.3644 and 1.3672 if the price stays above the moving average. A consolidation below the moving average would allow considering short positions with targets at 1.3428 and 1.3306. But who expects a strong dollar rally right now? Occasionally, the dollar might show minor corrections. However, real signs of de-escalation of the global trade war are needed for a more sustained rally.

Explanation of Illustrations:

Linear Regression Channels help determine the current trend. If both channels are aligned, it indicates a strong trend.

Moving Average Line (settings: 20,0, smoothed) defines the short-term trend and guides the trading direction.

Murray Levels act as target levels for movements and corrections.

Volatility Levels (red lines) represent the likely price range for the pair over the next 24 hours based on current volatility readings.

CCI Indicator: If it enters the oversold region (below -250) or overbought region (above +250), it signals an impending trend reversal in the opposite direction.

Paolo Greco,
Analytical expert of InstaForex
© 2007-2025
Summary
Urgency
Analytic
Stanislav Polyanskiy
Start trade
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

Good news already priced in?

Not long ago, Donald Trump could send Wall Street into turmoil with a single social media post. Now, he is threatening to fire the Fed chair and remove the firewall

Marek Petkovich 09:13 2025-07-21 UTC+2

What to Pay Attention to on July 21? A Breakdown of Fundamental Events for Beginners

There are no macroeconomic reports scheduled for Monday. Therefore, weak market movements can be expected. Of course, Donald Trump could unexpectedly return to the spotlight at any moment with

Paolo Greco 04:01 2025-07-21 UTC+2

EUR/USD Weekly Preview: Tariff Saga, ECB Meeting, PMI and IFO Indices

The penultimate week of July lies ahead. We will learn the outcome of the next European Central Bank meeting as well as the July figures of key macroeconomic indicators. Additionally

Irina Manzenko 00:07 2025-07-21 UTC+2

U.S. Dollar. Weekly Preview

As mentioned in the two previous reviews, market movements next week will depend on the "four global themes." I previously stated that there might be no news on these themes

Chin Zhao 00:06 2025-07-21 UTC+2

British Pound. Weekly Preview

The fate of the British pound will also lie within the realm of the "four global themes": the standoff between Trump and Powell, new U.S. trade deals, Trump's new tariffs

Chin Zhao 00:06 2025-07-21 UTC+2

Euro Currency. Weekly Preview

The upcoming week promises to be an interesting one. Market participants are about to get answers to several key questions. First, will there be an upward corrective wave as part

Chin Zhao 00:06 2025-07-21 UTC+2

XAU/USD. Analysis and Forecast. Gold is supported by moderate USD weakness and trade-related uncertainty

Today, gold is trading higher, remaining within a sideways trend. Late Thursday, Federal Reserve official Christopher Waller stated that rising risks to the economy could justify a key rate

Irina Yanina 19:15 2025-07-18 UTC+2

AUD/USD. Analysis and Forecast

Today, the AUD/USD pair climbed above the key psychological level of 0.6500, attempting to confirm its recent positive momentum. The main driver behind the Aussie's rise is the weakening

Irina Yanina 13:49 2025-07-18 UTC+2

USD/CAD. Analysis and Forecast

Today, Friday, the USD/CAD pair is pulling back from a three-week high near 1.3775 recorded yesterday. At the moment, prices are trading slightly below the 1.3730 level, showing a modest

Irina Yanina 13:38 2025-07-18 UTC+2

The European Central Bank May Postpone Its Rate Cut Until December

While the euro attempts to stage a correction against the U.S. dollar, a survey of economists suggests that the European Central Bank may delay its final interest rate cut until

Jakub Novak 11:37 2025-07-18 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.