GBP/USD trades around 1.2950 with eyes on tariffs, geopolitics

GBP/USD builds on Monday's modest gains and trades at around 1.2950 in the second half of the day on Tuesday. The improving risk mood and dismal Consumer Confidence data from the US make it difficult for the USD to find demand and support the pair.

GBP/USD Technical Overview

The Relative Strength Index (RSI) indicator on the 4-hour chart stays below 50, reflecting a lack of buyer interest. On the downside, 1.2870 (20-day Simple Moving Average (SMA), lower limit of the ascending regression channel) aligns as a key support level. If GBP/USD drops below this level and starts using it as resistance, 1.2800 (200-day SMA) could be seen as the next bearish target.

Looking north, first resistance could be spotted at 1.2960 (50-period SMA) ahead of 1.3000 (mid-point of the ascending channel, static level) and 1.3040 (static level).

Fundamental Overview

GBP/USD started the week on a bullish note and climbed above 1.2970 before losing its traction in the American session, as the US Dollar (USD) benefited from the upbeat data. S&P Global Composite Purchasing Managers Index (PMI) rose to 53.5 in March's flash estimate from 51.6 in February, highlighting an ongoing expansion in the private sector's business activity at an accelerating pace.

In the second half of the day, the Conference Board will release the US Consumer Confidence Index data for March. A significant decline in this data could hurt the USD with the initial reaction and help GBP/USD keep its footing.

On Wednesday, the Chancellor of the Exchequer will deliver the UK 2025 Spring Statement in the House of Commons. Bank of England (BoE) Governor Andrew Bailey said on Monday that they face a challenge to raise the potential growth rate of the economy.