Sterling pulled back from overnight highs above 1.34, dipping to the mid-1.3350s in early NorAm trading, as recent USD weakness subsided, though with global trade concerns and heightened Trump-Fed drama ongoing, the pound is likely to remain relatively well bid.

The 1.34 level has encountered resistance just above 1.3420, a familiar sell zone from late September, where selling pressure emerged around 1.3430.

There is, however, a stark positioning difference in the recent rise. IMM spec positioning was notably high in late-September 2024 at long 87k contracts, which hinted that specs were ripe to take profits as GBP/USD had climbed from August lows near 1.27.

In contrast, by April 15, sterling positioning was considerably lower, at long 6,500 contracts. With positioning relatively flat, the impulse to sell is likely far less, and should the current political and trade conditions remain intact, the dollar is likely to weaken further, propelling GBP/USD higher still as traders reload long positions. A break above 1.3437, the March 4 2022 weekly high, should open the way for a test of February 2022 highs above 1.36. However, if current tariff and Fed tensions ease, sterling is likely to come untethered from its rising upper 30-D Bolli and slip back toward its 10-DMA around 1.3188.
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(Paul Spirgel is a Reuters market analyst. The views expressed are his own)