GBP/USD remains offered, challenges the 1.2900 support

GBP/USD now reverses its initial uptick and puts the key 1.2900 contention zone to the test amid further buying interest in the US Dollar on Monday.

GBP/USD edges higher after coming within a touching distance of the lower limit of the ascending regression channel. Additionally, the Relative Strength Index (RSI) indicator on the four-hour chart rises toward 50, highlighting sellers' hesitancy.

On the upside, 1.2960 (20-period Simple Moving Average, 50-period SMA) aligns as immediate resistance before 1.3000 (mid-point of the ascending channel, static level) and 1.3040 (static level).

Looking south, supports could be seen as 1.2900-1.2890 (static level, 100-period SMA) and 1.2860 (lower limit of the ascending channel).

Fundamental Overview

The renewed US Dollar (USD) weakness at the beginning of the week helps GBP/USD hold its ground, as the market mood improves on easing fears over aggressive reciprocal US tariffs.

The White House is reportedly adjusting its approach to tariffs set to take effect on April 2, likely omitting a set of industry-specific tariffs while applying reciprocal tariffs aimed at countries with significant trade ties to the US, according to the Wall Street Journal. Similarly, Bloomberg reported US President Donald Trump's tariffs are expected to be more targeted than initially thought. Following these headlines, US stock index futures rise between 0.8% and 1.0% in the European morning.

Preliminary March Purchasing Managers Index (PMI) data from the UK and the US will be watched closely by market participants later in the day. In case the Composite PMI in the UK drops below 50 to show a contraction in the private sector's business activity, Pound Sterling could come under renewed selling pressure with the immediate reaction. On the flip side, the USD could regather its strength in the second half of the day in case PMI data from the US arrive above 50.