**GBP/USD Price Forecast: Falls to 1.34 as Dollar Rises in Trump’s China Shift**
By TradingNews.com Staff
The British pound (GBP) slid sharply against the US dollar (USD) in the latest currency market action, with the GBP/USD pair tumbling to the 1.34 mark as renewed dollar strength underpins a volatile foreign exchange environment. The dynamic shift stems largely from increased optimism for the US greenback, sparked by signals from former President Donald Trump pointing to a significant policy pivot with respect to US-China relations.
This article examines the core drivers fueling the GBP/USD drop, dissects the fundamental and technical outlooks, and evaluates what traders should watch for in the days and weeks ahead.
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### Dollar Revival on Trump’s Policy Stance Toward China
Recent comments from Donald Trump, who is regaining political attention, have reinvigorated sentiment around the US dollar. Trump, addressing prominent issues around America’s trade and strategic position, signaled readiness for a tougher, potentially more isolationist stance towards China. He discussed proposals for sweeping tariffs, a possible decoupling of certain critical supply chains, and tighter scrutiny of US-China economic interactions.
**Implications for the Foreign Exchange Market include:**
– **Investor Flight to Safety:** The heightened prospect of renewed US-China tensions has traders seeking refuge in the dollar, viewed as a global safe haven during geopolitical and economic instability.
– **Outlook for Global Growth:** If the US adopts an adversarial position toward China, global supply chains and trade flows could be hit, generating broader risk aversion across markets.
– **Dollar Demand:** With yields on US Treasuries edging higher and flight-to-quality moves intensifying, the dollar has outperformed other major currencies.
As a result, the GBP/USD exchange rate, already grappling with local pressures, is encountering fresh downside as dollar demand accelerates globally.
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### UK Economic Data Offers Little Relief
Contributing to sterling’s underperformance, recent economic releases from the UK have done little to encourage bullish sentiment among traders.
#### **Key Weakness Points:**
– **Subdued Growth Figures:** Data out of the UK has been underwhelming; GDP numbers continue to linger below expectations, with only tepid expansion in key sectors.
– **Persistent Inflation Pressure:** Inflation remains sticky, forcing the Bank of England (BoE) to maintain a cautious policy stance even as growth softens. While headline inflation has moderated, services and wage-driven components keep overall price growth above the BoE’s comfort zone.
– **Dovish BoE Rhetoric:** Recent commentary from BoE policymakers suggests the central bank is wary of choking off growth, making policy normalization more difficult in a challenging macro environment.
Despite modest optimism from select consumption or employment data, the broader mood around the UK economy remains cautious, limiting pound upside.
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### Technical Analysis: GBP/USD Slides Toward Major Support
From a charting perspective, the recent selloff in GBP/USD has accelerated as the pair broke critical technical thresholds.
#### **Technical Outlook:**
– **Downward Trajectory:** The pair has smashed through near-term supports at 1.3550 and 1.3450, heightening the risk of a move toward longer-term support levels.
– **Momentum Indicators:** Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) both point to intensifying downside momentum. The RSI, while not yet deeply oversold, is quickly approaching levels where a short-term bounce could materialize.
– **Key Support Levels:**
– Immediate: 1.3400 (psychological support)
– Secondary: 1.3350 (recent swing low)
– Deeper: 1.3200 (key technical support from 2023)
– **Resistance Points:**
– Near-term: 1.3500 (broken former support, now resistance)
– Upside: 1.3600
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