empty
14.05.2025 03:52 AM
GBP/USD Overview – May 14: Only the Trade Deal Matters

This image is no longer relevant

On Tuesday, the GBP/USD currency pair also ended what could only be called disgrace — its decline. On Monday, the U.S. dollar strengthened quite well following a successful first round of talks between the U.S. and China, although, in essence, both sides merely agreed not to shut down trade between the two nations completely. Thus, we're not talking about a formal deal, but rather the resumption of the trade process. Had this agreement not been reached, both economies would have continued to lose tens or even hundreds of billions of dollars, which no one wants.

We were once again reminded that, for traders at this moment, only developments in trade are significant. Last week, the Bank of England cut the key interest rate, the Federal Reserve maintained a "hawkish" stance, and the latest U.S. labor market and unemployment data were more encouraging than disappointing. Yet none of these events or releases triggered a significant dollar strengthening or helped the GBP/USD pair exit its sideways channel. As soon as Washington and Beijing agreed to lower tariffs for each other, the flat phase ended, and the dollar gained 130 pips in just a few hours.

Our perspective remains the same: currently, only trade-related developments hold significance. Important reports may cause short-term reactions, but don't influence the overall price direction.

At the same time, the British pound clearly cannot demonstrate growth that would be considered fundamentally justified. In other words, all the recent strength in the pound has little to do with the actual state of the UK economy. On the contrary, many UK macroeconomic indicators are deteriorating or remain weak. Just yesterday, it was reported that the unemployment rate rose to 4.5%. While that's not catastrophic, it was unexpected by the market, and any rise in unemployment is inherently bad for an economy. So, how did the market react? Precisely — it didn't. This once again proves how irrelevant macroeconomic data is at the moment.

We believe the dollar could strengthen by another few hundred pips based solely on the agreement between the U.S. and China. After all, this isn't a deal with the UK (which the market effectively ignored). However, Tuesday showed us that the market still hesitates to buy the U.S. dollar, likely due to continued fears of new policy surprises from Donald Trump. Regardless of fundamentals and macroeconomics, Trump may now be a significant barrier to dollar growth.

We've said it before: the problem with the dollar and the U.S. economy lies not just in Trump's sanctions and tariffs, but in the fact that Trump has shown the world his way of doing business. Consumers in many countries are now consciously rejecting American goods, starting with Tesla. So even if tariffs are lifted and agreements are signed, no one can force consumers to buy American if they don't want to.

This image is no longer relevant

The average volatility of GBP/USD over the past five trading days is 122 pips, which is considered "high" for the pair. On Wednesday, May 14, we expect the pair to trade between 1.3162 and 1.3406. The long-term regression channel is pointing upward, indicating a clear uptrend. The CCI indicator has formed a bearish divergence, which triggered the latest decline.

Nearest Support Levels:

S1 – 1.3184

S2 – 1.3062

S3 – 1.2939

Nearest Resistance Levels:

R1 – 1.3306

R2 – 1.3428

R3 – 1.3550

Trading Recommendations:

The GBP/USD pair maintains its upward trend and resumed a correction thanks to the agreement between China and the U.S. We still believe there is no fundamental basis for pound strength. If the de-escalation of the trade conflict continues — and all signs point in that direction — the dollar could quickly return to the 1.2300–1.2400 area, where its previous decline "under Trump" began. Therefore, long positions do not seem relevant in the context of trade war de-escalation. If the price stays below the moving average, sell orders remain attractive, with initial targets at 1.3184 and 1.3162.

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 InstaTrade
© 2007-2025

Recommended Stories

GBP/USD Overview – June 4: Trump Is Only Interested in the Big Fish

The GBP/USD currency pair traded lower on Tuesday, but the decline was weak, just like the volatility. Just look at the most recent stretch of the GBP/USD movement

Paolo Greco 03:41 2025-06-04 UTC+2

EUR/USD Overview – June 4: Words, Words... Where Are the Actions?

The EUR/USD currency pair traded relatively calmly throughout Tuesday, and the U.S. dollar even managed to gain slightly. However, we wouldn't pay much attention to a dollar rise

Paolo Greco 03:41 2025-06-04 UTC+2

The U.S. Economy Will Suffer More Than Others from Tariffs

Donald Trump is jeopardizing his own economy. This was the conclusion reached by the G-20 countries at their recent summit. According to summit participants, the discussions focused on the trade

Chin Zhao 00:28 2025-06-04 UTC+2

EUR/USD. Failed Assault on the 1.14 Level: Bears Retreat but Do Not Surrender

Buyers of EUR/USD started the trading week vigorously, testing the resistance level at 1.1450 (the upper line of the Bollinger Bands indicator on the daily chart) and updating a six-week

Irina Manzenko 00:27 2025-06-04 UTC+2

Euro: Trouble Has Arrived – Open the Gates!

Trouble came from where it was least expected. Frustrated by its coalition partners' refusal to support its immigration control plans, the Freedom Party dismantled the Dutch government. The country will

Marek Petkovich 00:27 2025-06-04 UTC+2

The dollar cannot find a reason to strengthen

The CFTC report showed that expectations for a reversal in the dollar have not materialized. After three weeks of relative stability, during which the total short position

Kuvat Raharjo 19:16 2025-06-03 UTC+2

The Pound Rises Against All Odds

The manufacturing PMI in May came in above expectations, but that was where all the positivity ended — 46.6 points, still below the expansion zone, and there's no talk

Kuvat Raharjo 19:09 2025-06-03 UTC+2

USD/JPY. Analysis and Forecast

The USD/JPY pair is showing mixed dynamics: despite the general recovery of the US dollar, the Japanese yen is under pressure from intraday sellers amid a combination of negative factors

Irina Yanina 18:27 2025-06-03 UTC+2

GBP/USD. Analysis and Forecast

The GBP/USD pair is attracting sellers today, pulling back from yesterday's high. This pullback is associated with a moderate strengthening of the US dollar, which is exerting pressure

Irina Yanina 18:24 2025-06-03 UTC+2

Traders Didn't Believe the Japanese Regulator

The Japanese yen lost some ground against the US dollar after Bank of Japan Governor Kazuo Ueda hinted today that the central bank may continue to slow the pace

Jakub Novak 11:16 2025-06-03 UTC+2
Can't speak right now?
Ask your question in the chat.
 

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 InstaTrade anyway.

We are sorry for any inconvenience caused by this message.