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GBP/USD Moves Beyond 1.3300 on Moody’s Downgrade of US Credit Rating, Sterling Boosted by UK GDP

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  • May 19, 2025
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GBP/USD currency pair has moved towards about 1.3300, helped by a soft US Dollar after Moody’s cut the US credit rating from Aaa to Aa1 due to increasing debt and fiscal difficulties. The downgrade, following in the footsteps of Fitch’s and S&P’s previous actions, put further pressure on the Greenback, which was already struggling from soft US economic data and increasing expectations for Federal Reserve rate cuts. The Pound Sterling, however, added strength following improved-than-anticipated UK GDP data, stoking speculation that the Bank of England would leave interest rates unchanged. Though alleviating global trade tensions and diplomatic progress might provide some boost to the USD, the prevailing momentum is in favor of the Pound. KEY LOOKOUTS • Market attention is still on the forthcoming US economic data and Fed comments, which can firm or change rate-cutting expectations in later this year. • Further robustness in UK data, particularly inflation and jobs figures, could impact the Bank of England’s policy and enable more GBP gains. • US-China trade talks and US-Iran nuclear discussions developments may influence general market mood and the path of the US Dollar. • Market participants will pay close attention to the response to Moody’s downgrade and Washington fiscal policy actions that could influence long-term USD stability. Several key drivers will impact the GBP/USD pair. Market participants will watch closely for the initial US economic data and Federal Reserve commentary in the next few weeks for indications of the potential for interest rate cuts and the timing thereof. Meanwhile, increasing evidence of stability in UK economic readings, especially in terms of inflation and employment, might support expectations that the Bank of England will keep or even increase its current policy stance. Also, advances in international geopolitics—like improvements in US-China trade negotiations and US-Iran nuclear talks—will influence risk sentiment and the US Dollar’s performance. Lastly, ongoing examination of the US fiscal outlook after Moody’s credit downgrade will put additional long-term pressure on the Greenback if worries over debt sustainability increase. GBP/USD currency pair is being upheld by robust UK GDP numbers and a diminishing US Dollar after Moody’s credit downgrading. Market participants are looking to future Fed indications and geopolitical events for guidance. US fiscal fears and expectations of rate cutting continue to weigh on the Greenback. • GBP/USD is quoting around 1.3300, underpinned by a soft US Dollar and robust UK economic numbers. • Moody’s lowered the credit rating of the US from Aaa to Aa1 based on increasing debt and interest burdens. • US economic statistics are weak, raising expectations of Federal Reserve rate cuts later in the year. • UK GDP came in higher than forecasts, supporting confidence in the Pound and easing pressure on the Bank of England to cut rates. • US consumer sentiment dropped sharply, with the University of Michigan Index dropping to its lowest level since June 2022. • Global trade optimism increases as the US and China weigh major tariff cuts. • Geopolitical events, including possible US-Iran nuclear negotiations and US-Russia diplomacy, are likely to impact market sentiment. The British Pound has maintained resilience in recent trading periods, inspired by both home-based economic robustness and increasing adversity within the US economy. The release of better-than-anticipated UK GDP data has enhanced confidence in the nation’s economic performance and hinted at steady growth momentum. Such positive data has inspired speculation that the Bank of England will continue with its existing policy stance, particularly if inflationary pressure continues to be present. Consequently, sentiment towards the Pound from investors is generally positive. GBP/USD DAILY PRICE CHART CHART SOURCE: TradingView The US Dollar, by comparison, has come under pressure after the move by Moody’s to lower the US credit rating on the basis of fear over increasing federal debt and interest payments. This comes on top of the more general fears that already exist as a result of a string of less positive US economic indicators. In the meantime, events on the international front—such as reports of a US-China trade agreement and possible diplomatic developments in Iran and Russia—are watched closely, as they have the potential to impact general market sentiment and risk appetite over the next few weeks. TECHNICAL ANALYSIS GBP/USD exhibits high bullish momentum as it trades close to the 1.3300 level, an important psychological and resistance area. The couple has managed to come back from the recent lows successfully with the support of fresh buying interest and weakness in the US Dollar. In the event that the uptrend fails not, the subsequent resistance would be experienced around 1.3350, while minor support would be experienced at 1.3250. Further upside potential might be signified by a break above 1.3300, but the traders will be waiting for signs of consolidation or pullback in this area before affirming direction. FORECAST GBP/USD may push higher even further, particularly if future UK economic indicators continue to be robust and the Bank of England continues to be hawkish. Continued breaking above resistance at 1.3300 might set the stage for 1.3350 and potentially 1.3400 short term. Further weakening in the US Dollar, spurred by expectations of dovish Fed policy or persistent fiscal concerns, would also facilitate this advance. Upsurge in world trade or geopolitical negotiations may also further augment market sentiment in the Pound’s favor. The potential for a slowdown in the UK economy or change in the tone of the Bank of England in favor of rate cuts could adversely put pressure on the Pound. If US data begins to indicate recovery or the Fed hints at less dovish policy, the US Dollar could regain traction. A move below the 1.3250 support level would help induce further selling pressure, likely sending the pair to 1.3200 or lower. Doubt surrounding worldwide diplomatic talks or bearishness in general markets could induce a risk-off scenario as well, helping the US Dollar as a safe-haven currency.

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Currencies

USD/CAD Clings to Muted Levels Below 1.3950 as Complacent US Inflation and Trade Sentiment Command Market Mood

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  • May 14, 2025
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USD/CAD currency pair continues to hold low below the 1.3950 level, pressured by a softer US Dollar in the wake of lower-than-anticipated US CPI releases that has rekindled speculation of Federal Reserve rate cuts towards the end of the year. The US Dollar Index (DXY) has fallen to about 100.15, as geopolitical trade tensions introduce another degree of uncertainty, with Canada nudging to eliminate Trump-era tariffs before any talks with the US. On the other hand, declining oil prices, fueled by increasing US crude inventories, are exerting gentle pressure on the Canadian Dollar. Traders now wait for critical US economic data and statements from Fed Chair Powell for additional market guidance. KEY LOOKOUTS • Thursday’s release of April’s PPI, Retail Sales, and Initial Jobless Claims will be keenly observed for evidence of inflationary trends and consumer demand, shaping USD sentiment. • Market players will watch Fed Chair Jerome Powell’s speech closely for any clues on the upcoming interest rate path, especially with growing expectations of possible rate cuts. • Continued attempts by Canada to phase out Trump-era tariffs have the potential to influence future trade negotiations and influence CAD strength based on progress and US reactions. • As a large oil producer, Canada’s currency is still exposed to crude oil price moves; recent inventory numbers indicating growing US stockpiles potentially continue to put pressure on WTI prices and negatively affect the CAD. Markets are presently centered on some major events that may dictate the USD/CAD direction in the short term. High-impact US releases, such as April’s Producer Price Index (PPI), Retail Sales, and Initial Jobless Claims, will provide new insights into the condition of the US economy and inflationary pressures. Fed Chair Jerome Powell’s speech later this week is also under the limelight, with investors looking for clarity on the central bank’s policy stance as expectations of rate cuts grow. Geopolitically, Canada’s efforts to scrap Trump-era tariffs bring an element of uncertainty, which could impact future trade flows and the Canadian Dollar. Crude oil prices are also a key driver, with increasing US inventories bearing down on WTI and Markets are looking to important US economic data and Fed Chair Powell’s comments for direction on future rate action in the face of growing rate cut expectations. Trade tensions between the US and Canada, as well as declining oil prices, put additional pressure on the Canadian Dollar and USD/CAD forecast. •  USD/CAD is unchanged around 1.3950, trading below the 200-day EMA with ongoing pressure on the US Dollar. • Downside US CPI numbers have boosted the chances of rate cuts from the Fed, weakening the USD and taking the DXY down to near 100.15. • Fed Chair Jerome Powell’s speech today is eagerly awaited for any policy cues on the future interest rate trajectory. • Thursday’s US releases – PPI, Retail Sales, and Jobless Claims – may cause short-term USD/CAD volatility. • Canada’s efforts to end Trump-era tariffs have revived trade worries, further complicating the CAD. • WTI crude oil prices have fallen to $62.93, burdened by an unexpected build in US crude stocks, weakening the oil-correlated CAD. • Cautious sentiment in the market, with economic indicators and geopolitical tensions set to decide the next direction of the pair. USD/CAD currency pair is now driven by a combination of economic and geopolitical forces that are directing investor sentiment. Recent United States inflation numbers have rekindled debates surrounding the monetary policy of the Federal Reserve, with markets speculating that interest rate cuts may be back on the agenda this year. This change in expectations is affecting confidence in the US Dollar, making the tone for currency markets to be cautious. In the meantime, focus is also shifting to future US economic data releases and a planned speech by Federal Reserve Chairman Jerome Powell, both of which are likely to provide more insight into the direction of Fed policy. USD/CAD DAILY PRICE CHART CHART SOURCE: TradingView Geopolitically, trade relations between the United States and Canada are again in the spotlight. Canada has said that the priority in any renewed negotiations with the US would be to have tariffs imposed under the Trump administration repealed. The latest comes at a time when world trade patterns remain fragile, and any improvement or reversal in the talks could weigh on the larger Canadian economic picture. In addition, price volatility in oil continues to exert a backburner influence on the Canadian Dollar, as the nation is such a major exporter of crude. TECHNICAL ANALYSIS USD/CAD is having difficulty getting traction as it remains below the 200-day Exponential Moving Average (EMA), an important indicator which is commonly regarded as a long-term trend indicator. The fact that the pair has failed to breach above this level implies sustained bearish pressure, and buyers have hesitated in the 1.3950 resistance area. Momentum oscillators such as the Relative Strength Index (RSI) also point towards a neutral to mildly bearish bias, reflecting limited upside power. Unless the pair closes decisively above the 200-day EMA, the ongoing range-bound action is likely to continue, with levels around 1.3880 gaining prominence in case of fresh selling. FORECAST If future US economic statistics surprise to the upside—like higher-than-anticipated retail sales or producer price inflation—it may reactivate demand for the US Dollar, providing support to USD/CAD. A dovish-sounding Fed Chair Jerome Powell may also propel expectations of postponed rate cuts, perhaps sending the pair above the 1.3950 resistance. In this situation, a prolonged breach above the 200-day EMA may initiate further upside towards the psychological 1.4000 level and above, particularly if crude oil prices continue to be soft, softening the Canadian Dollar. On the other hand, in case of disappointing US data or if Powell hints at a dovish policy approach, interest rate cut hopes might gain strength, increasing pressure on the US Dollar once again. This may lead to a fall in USD/CAD, particularly if oil prices come back and buoy the Canadian Dollar. A fall below significant support levels near 1.3880 may cause the pair

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Commodities Gold

Gold Prices Hold Firm as Trade Tensions, Fed Rate Cut Bets and Weak USD Fuel Safe-Haven Demand

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  • April 15, 2025
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Gold prices remain firmly supported near record highs as lingering US-China trade tensions, expectations of aggressive Federal Reserve rate cuts in 2025, and a persistently weak US Dollar continue to drive safe-haven demand. Although temporary tariff exceptions declared by President Trump have provided some relief in global risk appetite, persistent doubt regarding future trade policy and fears of recession continue to incline investors towards the non-yielding yellow metal. Market focus is now on upcoming US economic indicators and Fed Chairman Jerome Powell’s speech, which are likely to provide new cues on the Fed’s policy trajectory and may impact the next direction for gold. KEY LOOKOUTS •  Continuous tariff threats and retaliations are further propelling market uncertainty, sustaining gold prices at higher levels as investors take refuge in bullion. •  Increasing bets on several Federal Reserve rate cuts in 2025, fuelled by recession concerns and tariff-related economic stress, are expected to be a drag on the US Dollar and buoy gold. •  Gold continues to be firmly bullish above the $3,200 level, with resistance targeted near record high of $3,245-$3,246. A breakout below $3,167 may initiate a further correction. •  Investors look for hints from Fed Chair Jerome Powell’s imminent speech on directions for future monetary policy that may have a large bearing on the near-term path of gold. Gold prices remain near all-time highs as investors balance ongoing US-China trade tensions, a soft US Dollar, and increasing expectations of Federal Reserve rate cuts in 2025. Although short-term tariff reprieves announced by President Trump have modestly improved global risk sentiment, the overall uncertainty regarding future trade policy and its economic consequences maintains demand for safe-haven assets such as gold firm. The metal’s bullish momentum is still in place above the crucial $3,200 support level, although technical indicators point to a possibility of short-term consolidation. In the near term, all eyes are still on Fed Chair Jerome Powell’s speech later this week, which is likely to provide more hints on the central bank’s policy direction and could dictate the tone for gold’s next major move. Gold prices remain close to record levels as trade tensions and expectations of a Fed rate cut fuel safe-haven demand. The US Dollar weakness continues to underpin the metal, with markets waiting for Fed Chair Powell’s speech for new policy signals. •  Gold (XAU/USD) remains firm around $3,230, just below its record high, due to ongoing safe-haven demand. • Persistent US-China tariff tensions and economic danger concerns keep driving investors to gold as a haven asset. • Markets are already pricing in several Federal Reserve interest rate cuts during 2025, which puts downward pressure on the USD and makes gold more attractive. • A bearish outlook for the US Dollar as a result of recession concerns and trade-related uncertainty continues to buoy higher gold prices. • Optimism about Trump’s temporary tariff reprieves on electronics and possible auto exemptions has put a cap on new upside for gold, even with the overall bullish trend. • Support is close to $3,200, while a breakout above $3,245 would confirm more gains; a breakdown below $3,167 could usher in an even larger correction. • Market players wait for Fed Chair Jerome Powell’s coming address, which should provide important guidance on the rate cut trajectory and possible drivers of gold’s next significant movement. Gold prices are still underpinned as international markets struggle with increasing uncertainty driven by persistent US-China trade tensions and escalating anxiety about an economic downturn. The latest increase in tariff threats, coupled with China’s retaliatory actions, has forced investors to turn to safe-haven assets such as gold. Contributing to the positive sentiment, speculation remains increasing that the Federal Reserve will act against these trade-induced risks by making aggressive interest rate reductions in 2025, further devaluing the US Dollar and increasing the attractiveness of gold as a store of wealth. XAU/USD DAILY PRICE CHART CHART SOURCE: TradingView Although short-term relief was given by the White House’s announcement to exclude some products from tariffs, investors are still guarded because President Trump’s trade policy implies further policy turns may be on the horizon. Markets are also watching for coming economic indicators and comments from Federal Reserve officials, particularly Fed Chairman Jerome Powell, for hints on future monetary policy. With the international risk environment remaining strained and inflation worries still present, gold remains in focus as a trusted hedge during uncertain times. TECHNICAL ANALYSIS Gold prices remain in firm bullish momentum, comfortably above crucial support levels. The recent price action indicates that the buyers are still in command, particularly after fending off the $3,200 zone and moving higher towards all-time highs. But the Relative Strength Index (RSI) shows the metal is heading into the overbought zone, and that may trigger a short-term consolidation prior to any additional rally. So long as gold remains above its near-term support floor, the general uptrend continues intact, and any firm break above recent levels would leave the way open for new all-time highs in the days ahead. FORECAST Gold prices are likely to extend their bullish momentum if trade tensions persist and global economic uncertainty deepens. Continued weakness in the US Dollar, combined with expectations of multiple Federal Reserve rate cuts in 2025, could further fuel demand for the safe-haven metal. If investor sentiment remains risk-averse amid ongoing tariff threats and recession concerns, gold could attempt to break above its recent record high, potentially setting new all-time peaks in the coming weeks. Conversely, however, any meaningful shift in global risk appetite — for example, news of US-China trade talks breakthrough or additional tariff relief — would cut into the popularity of safe-haven assets such as gold. Moreover, if future US economic releases demonstrate unforeseen strength or if Federal Reserve policymakers hint at a reduced rate-cutting tempo, the US Dollar could bounce back, putting downward pressure on gold prices. In such a situation, the market would in all likelihood attempt to correct and fall back toward the lower supports levels before relocating.

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