The Pound Sterling increased by 0.32% against the US Dollar, reaching above 1.33, as US data indicated growth in the services sector. Despite this, the US Dollar did not find support, and GBP/USD trades at 1.3300.

The GBP/USD pair could not maintain its peak of 1.3330 due to the stronger US Dollar following the US ISM Services PMI data. The report showed an unexpected rise in services sector activity, yet the GBP/USD pair remains 0.30% higher.

Early European Trading Update

The GBP/USD is around 1.3290 during early European trading on Monday. The US Dollar has weakened amid economic uncertainties related to US trade policies.

What we’ve seen so far is a relatively moderate rise in the Sterling, which picked up 0.32% against the greenback, briefly moving beyond the 1.33 mark. Though this might seem like upward momentum, it’s more telling of the US Dollar’s softness than outright Pound strength. The ISM Services PMI showed a surprise uptick—ordinarily a bullish sign for the Dollar—but that didn’t last. In fact, the currency couldn’t find its footing even with stronger data on its side.

Markets often behave in ways that don’t match textbook expectations. Here, we have an instance where the Dollar is seemingly ignoring positive domestic data. That suggests traders may be focusing more heavily on broader concerns—likely the uncertainty surrounding US trade rhetoric and its potential impact on growth trajectory. The PMI figures should have, in theory, backed the Dollar. Instead, Sterling held onto an early lead.

By the time Europe opened, GBP/USD had edged down slightly towards 1.3290. This minor pullback isn’t surprising. Many pairs tend to ease after sharp moves as buyers and sellers realign on fresh information. Any attempt to break above 1.3330 again might be met with resistance, unless upcoming developments support clearer directional bias.

Short Term Market Outlook

We’re watching the 1.3250 level as potentially supportive in the short term. It’s an area where some bids may come in, particularly if sentiment remains tilted against the Dollar. However, the situation remains sensitive to headlines—especially those concerning the US administration’s stance on tariffs and global trade.

Looking at rate pricing, the Fed’s next steps still feel open to influence. Although inflation remains sticky, parts of the data are sending conflicting messages, making futures positions tricky to pin down. That’s added extra volatility along the forward curve, especially in the belly.

What stands out most is that the market seems more comfortable fading Dollar rallies than chasing them. For traders holding leveraged positions via options or futures, this makes timing less forgiving. Direction is one thing, but choosing the right expiry or strike is getting harder to model with confidence.

So we’re staying light on heavy directional exposure unless confirmation from macro prints aligns. For now, short-dated vols remain attractive if tied to defined risk. The Pound’s resilience carries weight, but without continuation in flows or positioning to back it up, this could just as easily unwind.

Create your live VT Markets account and start trading now.