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Currencies GBP/USD

GBP/USD Stabilizes at 1.3350 as Fed Hold, UK Inflation Influence Sentiment

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  • July 30, 2025
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GBP/USD remains stable at 1.3350 as the US Dollar weakens in anticipation of the Federal Reserve’s interest rate decision as markets already largely expect a halt to rate hikes. The currency pair continues its gradual bounce back after recovering from a two-month low on the back of a muted USD and risk-averse investor sentiment. While the Fed is likely to leave rates unchanged, all eyes are on the FOMC press conference for hints at potential rate cuts in the second half of the year. On the UK front, the Pound continues to come under pressure as it struggles with soft labor market data and high inflation, making the Bank of England’s policy outlook tricky before its next meeting. KEY LOOKOUTS •  Investors will keenly watch any indications of prospective rate cuts, particularly the possibility of easing from September. •  The next Q2 PCE inflation report and July Nonfarm Payrolls will be important to the Fed’s next step. •  There is a growing chance of a 25 bps rate cut in August as UK inflation remains elevated and economic growth slows. • Soft PMI prints and moderating labor market conditions may continue to burden the Pound Sterling in the immediate future. GBP/USD trades with a modestly upbeat bias at 1.3350 as the US Dollar loses strength in anticipation of the Federal Reserve policy release. Even though the Fed is universally anticipated to keep rates unchanged, market players will carefully scrutinize Chair Powell’s statements for any rate-cut guidance, maybe starting as early as September. On the British side, the Pound Sterling continues to be weighed down by soft labor market reports and persistent inflation concerns, making it difficult for the Bank of England to chart policy.”. In spite of a boost in food sales, soft PMI readings have raised hopes of a 25 bps rate cut by the BoE in August, contributing to the risk-averse sentiment around GBP. GBP/USD is trading around 1.3350 as the US Dollar weakens in anticipation of the Fed rate decision. Even as the Fed is likely to maintain rates, the market is looking for cues on when it will cut further. In the meantime, UK economic woes and BoE policy doubts cap Pound appreciation. • GBP/USD trades around 1.3350, bouncing back slightly from a two-month low of 1.3307. • The US Dollar continues to stay subdued in anticipation of the Federal Reserve interest rate decision. • The Fed will likely keep rates unchanged at 4.25%–4.50%, with a 97% probability already priced in. • The FOMC press conference is being waited upon for cues on potential rate cuts from September onwards. • UK labor market conditions are easing, damping the Pound’s resilience. • Inflation pressures in the UK are ongoing, making the Bank of England’s policy trajectory more challenging. •  Deteriorating UK PMI numbers and weakening economic momentum increase the prospects of an August BoE rate cut. GBP/USD is exhibiting stability around the 1.3350 mark as market sentiment shifts towards the imminent Federal Reserve interest rate determination. The central bank is expected to leave the current rate band of 4.25% to 4.50% intact, with an almost-unanimous market expectation of no action. But true attention is on the post-meeting discussion, where hints are being sought on when rate cuts may be implemented, perhaps from September. At a time when U.S. inflation is easing and growth worries are slowly emerging, this policy shift has raised hopes tentatively. GBP/USD DAILY PRICE CHART SOURCE: TradingView The economic sentiment in the UK is still unclear. Even though retail food sales experienced a modest boost, wider economic indicators like PMI reading still indicate weakness in momentum. The labor market is also cooling off, while inflation pressures linger. This combination puts the Bank of England in a precarious position before its next policy meeting. Markets are increasingly factoring in the chance of a rate cut in August, with a second one perhaps by the end of the year, as the central bank attempts to walk the tightrope between inflation control and the need to prop up slowing growth. TECHNICAL ANALYSIS GBP/USD is consolidating at the 1.3350 level, which is now a major support area after recent recovery from a two-month low at 1.3307. Short-term moving averages are starting to converge, which suggests that momentum could be turning towards a steadier uptrend, and the Relative Strength Index (RSI) has eased back from oversold levels. Traders are looking for any break above this level as confirmation of further bullish action, with volume trends supporting the likelihood of more gains if buying pressure continues to be sustained. FORECAST If the Federal Reserve sends a dovish message in its press conference—suggesting that it will reduce rates in the second half of this year—GBP/USD may experience fresh bullish moves. A move over the 1.3360–1.3380 resistance level may set the course toward the 1.3420 and 1.3500 levels. Any evidence of strength in the UK economy or a less hawkish tone from the Bank of England towards impending rate reductions can also provide additional support to the Pound. To the downside, if the Fed sees no reason to ease further or if future US economic statistics surprise to the upside, the US Dollar could strengthen, sending GBP/USD back to key support at 1.3300. A break below this level that holds could unleash further losses on the pair with potential targets at 1.3250 and 1.3200. Further poor UK data or high hopes of BoE rate reductions would tend to add bearish pressure.

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Currencies GBP/USD

Pound Sterling Weakens as UK Retail Sales Fall Short, BoE Rate Cut Expectations Intensify

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  • June 20, 2025
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Pound Sterling was again under pressure on Friday after its release of softer-than-expected UK Retail Sales data for May fell 2.7% month-on-month against the expected 0.5% decline. The underwhelming numbers have strengthened the anticipation of possible rate reductions by the Bank of England towards the end of this year, particularly following the central bank’s decision not to hike interest rates to 4.25% on Thursday. Further contributing to the Pound’s pressure were dovish remarks by BoE officials and Governor Andrew Bailey’s conservative projections. Though geopolitical tensions recently underpinned safe-haven flows into the US Dollar, de-escalating the threat of a U.S.-Iran conflict has weakened demand for the Greenback, sending GBP/USD to trade around 1.3470. KEY LOOKOUTS • The release of the preliminary S&P Global/CIPS PMI data for June later today will be instrumental in assessing the UK’s economic strength following the weak retail sales report. • Markets are increasingly factoring in two probable interest rate cuts by the Bank of England in this year, after soft consumer spending and dovish MPC member sentiments. • The Pound Sterling is encountering strong resistance near the psychological level of 1.3500, corresponding to the 20-day EMA, while support is near 1.3250. • Monday’s US PMI release and the situation in US-Iran tensions can have an impact on risk sentiment and US Dollar strength, which can have direct implications on GBP/USD direction. The Pound Sterling is facing weakness following a more-than-anticipated drop in UK Retail Sales for the month of May, igniting fears of declining consumer demand and the overall economic outlook. The information has ignited speculation that the Bank of England would reduce interest rates twice within the rest of the year, particularly after the central bank left interest rates steady and indicated a dovish policy stance. With the focus of traders now oncoming UK PMI releases and global risk sentiment governed by geopolitical events, specifically in the Middle East, the GBP/USD pair is still volatile and prone to responding to both domestic economic indicators and foreign market developments. The Pound Sterling declines after UK Retail Sales fell 2.7% in May, significantly worse than forecasted. Weighed down by increased bets on BoE rate cuts and risk-averse market sentiment, GBP/USD is down near 1.3470. • UK Retail Sales decreased by 2.7% in May, much worse than the forecast 0.5% drop. • Year-over-year sales dropped by 1.3%, falling short of the predicted 1.7% rise. • BoE kept interest rates unchanged at 4.25%, with a 6-3 vote division on Thursday. • Three MPC members voted in favor of a rate cut, citing softer labor market conditions. • Market now looks for two BoE rate cuts in the rest of 2025. • GBP/USD resists 1.3500, support at 1.3250. • Attention turns to UK and US PMI data on Monday for new economic indicators. The Pound Sterling came under fresh selling pressure following the release of disappointing UK Retail Sales figures for May, as increased worry about the nation’s economic resilience came to the fore. Retail Sales declined by 2.7% month-on-month, more than the anticipated 0.5% decline and unwinding the upwardly revised increase of 1.3% in the previous month. The sharp decline was primarily caused by poor performance at department stores and clothing stores, indicating a deceleration in consumer spending. Annual sales also fell short of estimates, declining by 1.3% rather than the expected 1.7% rise, reinforcing doubts over the general economic prognosis. GBP/USD DAILY PRICE CHART SOURCE: TradingView This poor consumer data has further bolstered the argument for interest rate reductions from the Bank of England in the second half of this year. Although the central bank maintained interest rates at 4.25% at its recent policy meeting, the 6-3 vote split, of which three were in favor of a reduction, suggests increasing support for loosening monetary policy. BoE Governor Andrew Bailey also was subdued, pointing to softness in labor markets and external threats, such as energy price volatility as a function of geopolitical tension. The other significant economic release that may inform market sentiment and BoE actions is the release of the UK’s June PMI data on Monday. TECHNICAL ANALYSIS GBP/USD currency pair is finding it difficult to sustain bullish momentum after unable to breach the psychological level of 1.3500, which is also the 20-day Exponential Moving Average (EMA). The pair is now trading at levels of 1.3470, reflecting indecision in the minds of traders. The 14-day Relative Strength Index (RSI) is currently floating near the neutral point of 50.00, signaling absence of any decisive directional bias in the near term. On the negative side, the May 16 low at 1.3250 is a crucial support level, and a decisive break above 1.3500 can trigger a retest of the three-year high at 1.3630. FORECAST If future UK economic numbers, especially the preliminary PMI readings for June, indicate business activity is resilient or improving, it may act as a short-term boost to the Pound Sterling. Moreover, any decrease in geopolitical tensions or US Federal Reserve dovish surprises would also weaken the US Dollar, providing upward potential for the GBP/USD. A sustained move above 1.3500 can clear the way towards the next resistance at 1.3630, particularly if market sentiment becomes positive towards the Pound. On the other hand, if UK data remains soft, particularly with additional evidence of declining consumer demand and labor market conditions, the Pound might stay at risk. Rising hope of BoE interest rate cuts would continue to pull the GBP down, while a recovery in the US Dollar backed by robust US PMI readings or Fed hawkish comments can increase the bears’ pressure. Such a scenario would see the GBP/USD pair fall toward major support levels around 1.3250, and potentially lower still if sentiment turns sour.

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Currencies GBP/USD

GBP/USD Approaches 39-Month High as US-EU Trade Tensions Ease and BoE Rate Cut Odds Fade

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  • May 27, 2025
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GBP/USD pair maintains its bullish run, trading close to a 39-month high of 1.3593 as risk appetite improves in the markets. US Dollar drops as easing of US-EU trade tensions, after President Trump’s tariffs delay, combined with increasing worries about the US fiscal outlook linked to the proposed “One Big Beautiful Bill,” counters any strength from yesterday’s data. The Pound Sterling, however, gets stronger as hotter-than-forecast UK inflation and retail sales data lead to traders reducing bets for hostile rate cuts from the Bank of England. The pairing of a weaker USD and more resilient GBP has boosted the pair’s sustained rally. KEY LOOKOUTS • Market attention will stay focused on future UK economic data, particularly inflation and employment numbers, that may determine the Bank of England’s future actions on interest rates. •  Investors are monitoring the fate of Trump’s “One Big Beautiful Bill” in the Senate, whose potential to increase the fiscal deficit might still be a drag on the US Dollar. •  Any trade negotiation news or changes between the EU and the US could play a major role in affecting risk sentiment and USD strength. •  Traders will watch if GBP/USD can convincingly move above the 39-month peak of 1.3593, which would make the door open to more bullish strength. In the coming weeks, traders will stay focused on major economic data releases from the UK, such as future inflation and employment figures, for additional hints regarding the direction of policy at the Bank of England. A persistent change in rate cut expectations could further buoy the Pound. In the US, news regarding President Trump’s intended “One Big Beautiful Bill” and its effects on the fiscal deficit might continue to put pressure on the US Dollar, particularly in case concerns over increasing debt continue. Furthermore, any shift in the tone of US-EU trade relations can affect market risk appetite and create volatility in the GBP/USD pair. Technically, a clean break above the 39-month high of 1.3593 would indicate additional room for the currency pair to move higher. Pound traders are waiting to see UK data and BoE policy cues as diminished rate cut hopes keep the Pound supported. Against this backdrop, US fiscal issues and softening US-EU trade tensions keep the Dollar under pressure. A breakout above 1.3593 may prompt additional gains in GBP/USD. •  GBP/USD hovers at a 39-month high of 1.3593 on the back of unwavering bullish momentum. •  US Dollar drops on damping US-EU trade tensions and escalating fiscal deficit fears. •  President Trump postpones EU tariff deadline, enhancing market risk appetite. •  Trump’s suggested “One Big Beautiful Bill” sparks fears of a $3.8 billion addition to the US deficit. •  Higher US bond yields may persistently drive high borrowing costs, weighing on the USD. •  Faster-than-anticipated UK inflation and retail sales lower the expectations of dovish BoE rate cuts. •  Technical interest continues at the 1.3593 resistance level, with a breakout indicating potential for additional GBP/USD gains. GBP/USD pair is well-supported as sentiment continues to improve due to decreasing trade tensions between the United States and the European Union. The last-minute postponement of US tariff action against the EU, after a call between European Commission President Ursula von der Leyen and President Trump, has given investor sentiment a boost and supported risk-taking. This has put a bearish squeeze on the US Dollar, which is already weak due to increasing worries over the nation’s fiscal prospects. The suggested “One Big Beautiful Bill,” comprising tax cuts and higher spending, is set to widen the US deficit by $3.8 billion, triggering concerns about economic stability in the long term. GBP/USD DAILY PRICE CHART CHART SOURCE: TradingView Simultaneously, the British Pound is strengthening as investors rethink expectations over UK monetary policy. April’s recent retail sales and inflation data were hotter than anticipated, prompting markets to revise downwards expectations of large interest rate reductions by the Bank of England. Traders now price just one possible rate reduction in 2025 and a 50/50 chance of a second, futures data quoted by Reuters show. This more aggressive tone has contributed to the appeal of the Pound, particularly as economic data provides evidence of robustness in consumer spending and inflation pressures. TECHNICAL ANALYSIS GBP/USD is continuing its strong uptrend, consolidating short of the 39-month high of 1.3593. The pair has been underpinned by sustained buying interest, with momentum indicators like the RSI remaining in bullish conditions, suggesting underlying strength. The key support is seen at the 1.3550 region, which has served as a good base in recent sessions. A decisive break above the resistance of 1.3593 may set the stage for more upside, while inability to hold above support may result in short-term consolidation. FORECAST If the positive mood persists and UK economic indicators continue to be robust, GBP/USD may move further higher. The dissolving hopes of aggressive rate cuts by the Bank of England, coupled with a weak US Dollar on the back of fiscal worries and better global risk appetite, could promote further gains. If such factors hold, the pair will look to set new highs at higher levels than of late, especially if future data continues to assert the UK’s economic robustness. Yet, any surprise decline in UK economic signals or change in Bank of England tone towards dovishness can put pressure on the Pound. On the other hand, if US fiscal worries recede or safe-haven demand for the Dollar comes back—perhaps prompted by renewed geopolitical tensions or soft global growth numbers—GBP/USD is likely to be under pressure. Renewed trade tension between the US and EU or political turmoil can also adversely influence overall market sentiment, cap the pair’s rally potential.

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