GBP/USD retreats further and breaks below 1.2800

The US Dollar is picking up extra pace and flirting with daily highs, sending GBP/USD to multi-week lows near 1.2770 in a context where safe-haven demand continues to dictate sentiment amid the chaos of US tariffs.

GBP/USD Technical Overview

The Relative Strength Index (RSI) indicator on the 4-hour chart stays below 40, reflecting the lack of buyer interest.

The pair was last seen trading near 1.2860, where the 200-period Simple Moving Average (SMA) on the 4-hour chart is located. In case GBP/USD drops below this level and starts using it as resistance, 1.2820 (200-day SMA) could be seen as next support before 1.2740 (static level).

On the upside, first resistance is located at 1.2900 (static level, support level) ahead of 1.2950 (50-period SMA, 100-period SMA) and 1.3000 (round level, static level).

Fundamental Overview

The US Dollar (USD) gathered strength on Friday and forced GBP/USD to erase its weekly gains. The data published by the US Bureau of Labor Statistics showed that Nonfarm Payrolls rose by 228,000 in March. This reading beat the market expectation of 135,000 by a wide margin and boosted the USD.

Additionally, Federal Reserve (Fed) chairman Jerome Powell said US President Donald Trump's tariffs are bigger than expected, and that they risk higher inflation and slower growth. "The Fed's obligation is to make certain that a one-time increase in price levels doesn't become an ongoing inflation problem," he added, further supporting the USD.

Over the weekend, US Commerce Secretary Howard Lutnick confirmed that the tariffs will not be postponed and the policy will remain in place for days and weeks. In the meantime, US President Donald Trump said on Sunday that unless the China trade deficit is solved, there will be no deal.

Following these developments, safe-haven flows dominate the action in financial markets on Monday. At the time of press, US stock index futures were down between 3.4% and 4% on the day, while the UK's FTSE 100 Index was losing more than 4.5%.

In the absence of high-tier data releases, the risk-averse market atmosphere could continue to cap the pair's upside.