GBP/USD declined by 0.15% on Tuesday, closing near 1.3500 after a volatile trading session that saw a 60-pip range and multiple sharp reversals during both European and US trading hours [1]. The early session was influenced by developments in the Iran standoff, as President Trump extended his deadline for direct talks, but Tehran declined to participate. While the White House described this as a final goodwill gesture, market participants interpreted it as another postponement, initially boosting risk appetite and weighing on the US Dollar [1].
However, the release of stronger-than-expected US March Retail Sales data (+1.7% MoM versus +1.4% forecast) and hawkish testimony from Fed Chair-designate Kevin Warsh reversed the earlier risk-on sentiment, driving flows back into the US Dollar and pressuring GBP/USD lower [1]. On the UK side, March employment data was mixed: the ILO Unemployment Rate fell to 4.9% (better than the 5.2% consensus), but the Claimant Count rose by 26.8K (above the 21.4K forecast) and 3M Employment Change slowed to 25K from 84K. Wages remained firm, with Average Earnings (excluding bonus) at 3.6% YoY, slightly above the 3.5% expected [1].
Technical analysis shows GBP/USD trading at 1.3504, below the daily open of 1.3529, maintaining a mild bearish intraday tone. The pair remains above both the 50-day and 200-day EMAs (1.3424 and 1.3364, respectively), supporting a constructive near-term bias, though momentum indicators suggest the upside may be stretched and vulnerable to consolidation [1]. The market is now focused on Wednesday's upcoming UK March Consumer Price Index (CPI) release, with consensus expecting a 3.3% YoY headline print versus 3% previously and the Core measure forecast steady at 3.2% [1].
CONCLUSION
GBP/USD faced downward pressure as robust US economic data and hawkish Fed commentary outweighed initial risk-on sentiment from Iran ceasefire developments. Mixed UK employment data and anticipation of the upcoming CPI release add to the cautious market tone. Traders are watching key technical levels and Wednesday's inflation data for further direction.