The GBP/USD currency pair is experiencing a downward trend, currently trading at 1.3570 during the European trading session on Tuesday. This decline is attributed to the US Dollar's strength, which is benefiting from a risk-off market sentiment. The US Dollar Index (DXY) is on the rise, indicating a stronger Greenback against major currencies. The market's shift towards risk aversion is particularly notable due to renewed tensions between the United States and Iran, with S&P 500 futures trading 0.2% lower. This backdrop of geopolitical uncertainty is likely contributing to the US Dollar's outperformance. Additionally, the upcoming US Consumer Price Index (CPI) data for April, expected to show a jump in inflation, could further strengthen the US Dollar's position. On the other hand, the UK's preliminary Q1 Gross Domestic Product (GDP) data, anticipated to show a faster growth rate, might provide some support for the British Pound. However, the immediate focus remains on the technical analysis of the GBP/USD pair, which suggests a bullish bias as long as it stays above key support levels. The 20-day exponential moving average (EMA) at 1.3534 and the 50% Fibonacci retracement at 1.3520 are crucial for maintaining this positive outlook. The 61.8% Fibonacci retracement at 1.3604 is a significant resistance level, and a break below the 20-day EMA could expose deeper supports. The Relative Strength Index (RSI) indicates mildly positive momentum, but the market's overall sentiment remains cautious due to the global economic landscape and geopolitical risks.
