By Areena Fx- The Pound Sterling recovers to near 1.3500 against the US Dollar after clawing back initial losses.
- The improvement in US-China trade relations has boosted US Consumer Confidence.
- Markets don’t expect the BoE to cut interest rates in June.
The Pound Sterling (GBP) recoups initial losses against the US Dollar (USD) during European trading hours on Wednesday after correcting to near 1.3460 earlier in the day. The GBP/USD pair bounces back as the US Dollar (USD) gives up initial gains despite firm hopes that the United States (US) and the European Union (EU) will reach a trade deal soon.
The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, falls back to near 99.50 from the intraday high of 99.85.
On Tuesday, US President Donald Trump expressed confidence in a post on Truth.Social that the EU is increasing efforts to reach a bilateral trade deal. “I was extremely satisfied with the 50% Tariff allotment on the European Union, especially since they were ‘slow walking’. I have just been informed that the EU has called to quickly establish meeting dates. This is a positive event, and I hope that they will,” Trump wrote.
Increasing optimism over the US-EU trade deal has helped the US Dollar claw back almost the losses seen on Friday, when US President Trump threatened to impose a flat 50% tariff on imports from the EU.
Another reason behind the recent strength in the US Dollar is the upbeat US Consumer Confidence data for May. The data, released on Tuesday, showed that Consumer Confidence increased substantially to 98.0 after deteriorating for five consecutive months. The commentary from the Conference Board showed that de-escalation in US-China trade tensions contributed significantly to lifting households’ mood.
Daily digest market movers: Pound Sterling recovers against its peers
- The Pound Sterling rebounds against its peers, except the New Zealand Dollar (NZD), during European trading hours on Wednesday. The British currency bounces back as investors seek fresh cues on whether the Bank of England (BoE) will cut interest rates again at its June policy meeting.
- The BoE reduced its borrowing rates by 25 basis points (bps) to 4.25% earlier this month, with a 7-2 vote split, and guided a “gradual and cautious” interest rate cut approach.
- The latest strong United Kingdom (UK) Consumer Price Index (CPI) and Retail Sales data for April, along with the upbeat Q1 Gross Domestic Product (GDP) figures, are sufficient to discourage BoE officials from cutting interest rates further.
- This month, the UK service inflation data, closely tracked by BoE policymakers, accelerated sharply to 5.4% year-over-year from 4.7% in March. Month-on-month, Retail Sales rose at a robust pace of 1.2%, compared to the 0.1% seen in March. UK economic growth came in at 0.7%, significantly higher than the 0.1% recorded in the last quarter of 2024.
- The International Monetary Fund (IMF) has raised the UK GDP growth forecast for the current year to 1.2%, slightly higher than 1.1% anticipated earlier, on the back of an upbeat economic performance in the January-March period.
- This week, investors will focus on the Personal Consumption Expenditure Price Index (PCE) data for April, which will be released on Friday. The inflation data is unlikely to influence market expectations for the Federal Reserve’s (Fed) monetary policy outlook as officials are expected to remain on hold until they get clarity on new economic policies under Trump’s leadership and the scope of their consequences on the economy.
British Pound PRICE Today
The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.06% | -0.01% | -0.17% | 0.09% | -0.04% | -0.48% | -0.12% | |
| EUR | 0.06% | 0.08% | -0.07% | 0.14% | 0.02% | -0.39% | -0.02% | |
| GBP | 0.00% | -0.08% | -0.14% | 0.10% | -0.05% | -0.14% | -0.10% | |
| JPY | 0.17% | 0.07% | 0.14% | 0.22% | 0.10% | -0.30% | 0.11% | |
| CAD | -0.09% | -0.14% | -0.10% | -0.22% | -0.12% | -0.52% | -0.20% | |
| AUD | 0.04% | -0.02% | 0.05% | -0.10% | 0.12% | -0.08% | -0.06% | |
| NZD | 0.48% | 0.39% | 0.14% | 0.30% | 0.52% | 0.08% | 0.03% | |
| CHF | 0.12% | 0.02% | 0.10% | -0.11% | 0.20% | 0.06% | -0.03% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
Technical Analysis: Pound Sterling recovers from 1.3460
The Pound Sterling rebounds to near 1.3500 from the intraday low of 1.3460 against the US Dollar on Wednesday. The outlook of the pair remains firm as the 20-day Exponential Moving Average (EMA) slopes higher around 1.3380.
The 14-day Relative Strength Index (RSI) holds above 60.00, suggesting that the bullish momentum is intact.
On the upside, the January 2022 high of 1.3750 will be a key hurdle for the pair. Looking down, the 20-day EMA will act as a major support area.