**GBP/USD Climbs Closer to Mid-1.3400s as Trade Optimism Undermines the Safe-Haven USD**
*Original reporting by Haresh Menghani for FXStreet*
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### Overview
The GBP/USD currency pair extended its bullish momentum during the Asian trading session on Friday, moving closer to the mid-1.3400s region. This steady ascent is largely attributed to an optimistic outlook surrounding global trade, which has undermined the appeal for traditional safe-haven assets like the US Dollar (USD). As participants digest positive trade-related developments and anticipate upcoming macroeconomic reports, the pound is maintaining its upward bias against the greenback.
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### Key Drivers for the GBP/USD Rally
Several interconnected factors are fueling the GBP/USD rally, shifting sentiment in favor of the British pound. These include:
– **Easing Global Trade Tensions**
– **Dovish Federal Reserve Outlook**
– **Post-Brexit Optimism for the UK**
– **Technical Factors and Market Sentiment**
– **Upcoming Economic Data Releases**
Let’s analyze each of these catalysts in detail.
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### Easing Global Trade Tensions
Markets remain enthused about the potential resolution of prolonged trade disputes, mainly between the United States and China. Reports indicating positive progress on trade negotiations have stirred a risk-on mood, compelling investors to move away from the US Dollar, traditionally perceived as a safe-haven during periods of geopolitical uncertainty.
– US and Chinese officials made constructive statements regarding the possibility of formalizing a “phase one” trade deal.
– Recent headlines out of Washington and Beijing suggested that both sides are eager to de-escalate tensions and roll back some tariffs.
– Equity markets globally responded positively. This optimism has bled into currency markets, pressuring the US Dollar and supporting riskier assets, including the British pound.
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### Dovish Federal Reserve Outlook
Monetary policy stances continue to be a significant influence on major currency pairs like GBP/USD.
– The Federal Reserve’s recent signals suggest a willingness to keep monetary policy accommodative in the near future.
– Markets are pricing in “lower-for-longer” on US interest rates, eroding much of the greenback’s carry advantage.
– Federal Reserve Chair Jerome Powell’s recent remarks at key forums, wherein he signaled that inflation could run above the Fed’s long-term target before raising rates, have dampened USD demand.
– Even as US macro data points have been stronger of late, investors believe the Fed will err on the side of caution to support ongoing economic recovery.
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### Post-Brexit Optimism for the UK
Sterling’s buoyancy is also being propelled by an improving post-Brexit outlook.
– The UK government has initiated multiple rounds of trade discussions with global partners, seeking to leverage its post-Brexit independence.
– Recent domestic economic data, including better-than-expected GDP and employment figures, have bolstered confidence in the UK’s economic prospects.
– The Bank of England has also maintained a relatively optimistic tone, supporting the notion of ongoing economic resilience.
– Hopes for additional fiscal stimulus measures from the UK government have further brightened the outlook for the pound.
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### Technical Factors and Market Sentiment
From a technical perspective, the GBP/USD pair appears poised for further gains, especially given its recent price action.
– The pair has maintained an upward trajectory above its key short-term moving averages, notably the 50-period and 100-period simple moving averages on the hourly chart.
– Buy-on-dips strategies remain popular among market participants, with strong support noted around the 1.3400 handle.
– Momentum oscillators, such as RSI and MACD, have remained in bullish territory across multiple timeframes.
– Breaks above recent resistance levels seem likely, especially if risk sentiment remains stable or improves further.
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### Upcoming Economic Data Releases
Market participants are closely watching several macroeconomic reports due later in the trading day and over the coming week.
– US
Read more on GBP/USD trading.