GBP/USD continues to climb as trade deal hopes fuel Greenback declines

• GBP/USD stepped into a third straight day of gains on Wednesday, knocking on 1.3600.
• Hopes for last-minute trade deals to avert hefty tariffs are kicking investor sentiment higher.
• As traders bank on another tariff threat walkback, the Greenback is taking a fresh beating.

GBP/USD climbed on Wednesday, posting strong gains for a third straight day and clawing back toward the 1.3600 handle. The US Dollar (USD) is taking a beating across the board, driven higher by broad-market expectations of last-minute trade deals between the Trump administration and everybody else before the August 1 “reciprocal” tariff deadline. Greenback selling pressure across the FX space gave the Pound Sterling (GBP) a leg up, bolstering cable action further into the bullish side.

The US has a tentative trade agreement on the board with Japan, which would include a 15% reciprocal tariff on all Japanese goods, and the Trump administration may have made it harder, not easier, for foreign companies, at least those based in Japan, to move their production chains into the US. Rumors abound of another possible trade deal in the works with the European Union (EU), but key personnel within the Trump team have splashed cold water on those rumors, branding them speculation.

A double-header Purchasing Managers Index (PMI) print is on the docket for Thursday. United Kingdom (UK) and US PMI figures in both the Manufacturing and Services components are expected to tick higher in June.

GBP/USD price forecast

GBP/USD continues to grind its way into a firm uptrend, however Cable needs to clear the 20-day SMA at 1.3564. Momentum indicates that buyers are gathering steam as depicted by the Relative Strength Index (RSI).

If Pound bidders are able to muscle GBP/USD back over the 20-day SMA, the next resistance would be the 1.3600 figure. A breach of the latter will expose the 1.3650 mark, followed by 1.3700. Conversely, if GBP/USD drops below the 50-day SMA at 1.3520, the next support would be 1.3500. Further demand levels lie underneath, with the 1.3402 July 21 daily low.

GBP/USD daily chart