GBP/USD Eyes $1.3443 as Tariff, Fed Risks Loom

The pound rose to near $1.3390 against the dollar in early Monday trading as the dollar weakened.

Investors are getting nervous about the economic impact of President Donald Trump’s aggressive trade policies and some are now openly wondering if this could lead to a slowdown in the US economy.

Markets took note as UK Prime Minister Keir Starmer spoke to President Trump for the first time since the White House imposed tariffs on British exports. Starmer reportedly told Trump that trade should be open but national interests should be protected. According to Downing Street both sides described the call as “ongoing and productive”.

The latest Trump tariffs – 10% on UK goods and 25% on cars, steel and aluminium – have ratcheted up tensions. But hopes of a broader US-UK trade deal are propping up the pound for now as traders see progress in talks as a counterweight to tariff disruption.

Fed Caution May Cap Sterling Gains

Despite the pound’s strength the outlook for GBP/USD could be clouded by comments from Fed Chair Jerome Powell last week. He said rising tariffs could drive up inflation and slow down the economy – making it harder for the central bank to decide what to do next. But he said no immediate rate change, saying they need to “wait for more clarity”.

These comments suggest a delicate balance ahead for the Fed: navigating inflation risk while managing growth expectations. If US data shows resilience or if Fed officials get more hawkish the dollar could bounce back – limiting how far the pound can go from here.

For now sentiment is in favour of the pound as the diplomatic tone improves and the dollar softens. But traders will be watching for any change in Fed speak or concrete outcomes from US-UK trade talks.

GBP/USD Eyes $1.3440—But Watch for Pullback First

The British pound is trading just under $1.3400 after a strong breakout above $1.3340, backed by rising momentum and a clean trendline structure. The move was fueled by softer U.S. dollar sentiment, but now price is pausing near the 23.6% Fibonacci retracement at $1.3386.

The MACD remains in bullish territory, although histogram bars show early signs of fading strength. For newer traders, this is a classic “wait for the dip” setup. A pullback to the $1.3364 or $1.3340 zone (38.2% and 50% Fibs) could offer a solid entry if support holds.

On the upside, if buyers reclaim $1.3422 with volume, the next potential targets are $1.3443 and $1.3462. However, a close below $1.3340 may signal a loss of momentum.

Trade Setup

• Buy on pullback: $1.3364–$1.3340

• Targets: $1.3443, $1.3462

• Stop Loss: Below $1.3328 (61.8% Fib)

Let the market come to you—don’t chase the breakout.