GBPUSD: BUY 1.3550, SL 1.3510, TP 1.3640 | 28 May 2025

Event to watch out for today:

17:00 EET. USD - Consumer Confidence Indicator

GBPUSD:

The GBP/USD pair extended its winning streak for the third consecutive session, trading near 1.3570 during Asian hours on Tuesday. The pair is near the 39-month high of 1.3593 seen on Monday. The pair continues to rise amid a weakening US Dollar (USD) due to growing concerns over the United States (US) debt problems.

The dollar faces challenges as easing trade tensions between the United States and the European Union (EU) increase traders' appetite for risk. U.S. President Donald Trump extended the deadline for imposing tariffs on the European Union (EU) from June 1 to July 9 after a phone call with European Commission President Ursula von der Leyen on Sunday. On Friday, Trump threatened to impose 50 percent tariffs on imports from the European Union (EU).

In addition, the US dollar is attracting sellers as the United States (US) faces budget deficit concerns ahead of the Senate's consideration of Trump's “one big beautiful bill”. According to the Congressional Budget Office (CBO), the bill would increase the deficit by $3.8 billion as it would provide tax breaks on tip income and American-made auto loans.

Trump's bill includes provisions such as tax cuts, spending increases and raising the debt ceiling. This could worsen the U.S. government's fiscal position and increase the risk that bond yields will rise longer. Higher bond yields could increase the cost of borrowing for consumers, businesses and governments.

Additionally, the Pound Sterling (GBP) is rising as traders reassess the Bank of England's (BoE) monetary policy outlook following the release of better-than-expected inflation and retail sales data for April released last week. According to Reuters, the futures market indicates that UK rates will fall by around 38 basis points (bps) in 2025, suggesting one interest rate cut of 25 bps and a roughly 50/50 chance of a second cut.

Trading recommendation: BUY 1.3550, SL 1.3510, TP 1.3640

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