- Pound Sterling will drop to nearly 1.2640 against the US dollar after strong US durable goods order data in January.
- President Trump said he will soon release details of tariffs in the eurozone.
- Investors are awaiting the Trump Starmer Conference and US PCE inflation data.
Pound Sterling (GBP) will slide to nearly 1.2640 against US dollars (USD) during North American trading hours on Thursday. The GBP/USD pair faces a US Dollar Index (DXY) tracking the value of greenbacks against six major currencies, rising to nearly 106.90 after the release of order data for bright US (US) durable goods in January. The Census Bureau reported that new orders for durable goods rose at a robust pace of 3.1% versus an estimate of 2%. Economic data fell 2.2% in December.
Meanwhile, the first US unemployment claims for the week ending February 21 are significantly higher than expected. The first individual to claim unemployment benefits was 242K, higher than the 221K estimate.
The US dollar was already outperforming due to uncertainty over the US President Donald Trump's tariff agenda. On Wednesday, US President Donald Trump said he was ready to announce tariffs for the eurozone. “Details about EU tariffs will come soon,” Trump said. He added that tariffs are 25% for cars and other areas. The foundation of the world trade war has already been raised by Trump imposes a 10% tariff on all imports from China, but an increase in import obligations in the bloc of 27 countries will escalate the fears of economic slowdowns around the world.
In the past, Donald Trump has offered Canada and Mexico an additional month extension to avoid tariffs. “Canada and Mexico tariffs will come into effect on April 2,” Trump said. Previously, the deadline for the US to slap taxes in North American partners was February 4th. This was postponed to March 4 after agreeing to strengthen border securities to limit the flow of fentanyl and undocumented migrants into the economy.
For domestic flights, the US dollar outlook appears to have lost strength due to the contraction of the S&P Global US Services Purchasing Managers Index (PMI) and the huge slump in consumer trust data in February for the first time in more than two years. Weak economic data also raised expectations that the Federal Reserve's restrictive policy stance would not last long. According to the CME FedWatch tool, there is a 68% chance that the Fed will cut interest rates at its policy meeting in June.
For detailed guidance on the Fed's policy outlook, investors will focus on US Personal Consumption Expense Price Index (PCE) data for January, which will be released Friday.
Daily Digest Market Mover: Pond Sterling moves higher, but meet Trump Starmer
- Sterling of the pound is profiting against its major peers except the US dollar on Thursday, while investors await a meeting between British Prime Minister Donald Trump and British Prime Minister on Thursday. Starmer is expected to negotiate trade policies between the two countries.
- Investors will be very careful about Trump Starmer's meeting, given that the UK is the fifth-largest trading partner after Canada, Mexico, China and Germany, according to data from the US Economic Analysis Agency (BEA).
- Trump Starmer's talks on trade policy are expected to be sound as Trump has never raised any issues regarding UK unfair trade practices in the tariff threat since his campaign. President Trump also said at a press conference earlier this month that he was unsure about imposing tariffs on the UK and that he was confident that Prime Minister Kiel Starmer could sign a contract that he was “very nice.”
- Meanwhile, British Prime Minister Rachel Reeves believes that trade and investment between the United States and the United Kingdom will not derail the line by the new US administration. “When President Trump was in the White House last time, the trade and investment flows between our two countries will increase and I have all the confidence that it could happen again,” Reeves said on the sidelines of the G20 Finance Minister's summit in an interview with Reuters.
British pound prices today
The table below shows the rate of change in the British pound (GBP) against the major currencies listed today. The British pound was the strongest against the Japanese yen.
| USD | EUR | GBP | JPY | CAD | aud | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.21% | 0.09% | 0.49% | 0.16% | 0.17% | 0.29% | 0.49% | |
| EUR | -0.21% | -0.12% | 0.23% | -0.05% | -0.04% | 0.07% | 0.25% | |
| GBP | -0.09% | 0.12% | 0.40% | 0.07% | 0.08% | 0.20% | 0.38% | |
| JPY | -0.49% | -0.23% | -0.40% | -0.30% | -0.29% | -0.20% | 0.00% | |
| CAD | -0.16% | 0.05% | -0.07% | 0.30% | 0.01% | 0.13% | 0.30% | |
| aud | -0.17% | 0.04% | -0.08% | 0.29% | -0.01% | 0.12% | 0.29% | |
| NZD | -0.29% | -0.07% | -0.20% | 0.20% | -0.13% | -0.12% | 0.17% | |
| CHF | -0.49% | -0.25% | -0.38% | -0.00% | -0.30% | -0.29% | -0.17% |
The heatmap shows the rate of change of each other's major currencies. The base currency is selected from the left column, and the estimated currency is selected from the top row. For example, if you choose the British pound from the left column and move it along the horizon to US dollars, the rate of change shown in the box represents GBP (base)/USD (QUOTE).
Technical Analysis: Pond Sterling continues to face pressure near Emma for 200 days
Sterling for the pound will drop to nearly 1.2640 against the US dollar in Thursday's North American session. The GBP/USD pair continues to face pressure near the 200-day index moving average (EMA), which trades at around 1.2680. Cables surpass the Fibonacci retrace of 38.2% to the downward trend from the end of September to mid-January, around 1.2620.
The 14-day relative strength index (RSI) oscillates above 60.00. If the RSI (14) is above that level, the bullish momentum remains.
Looking down, the lowest value of 1.2333 on February 11 serves as an important support zone for the pair. Conversely, Fibonacci retracements of 50% and 61.8% at 1.2767 and 1.2927 respectively serve as important zones of resistance.
US Dollar FAQ
The US dollar (USD) is the official currency of the United States and is “effectively” currency in a considerable number of other countries in circulation along with local notes. According to data from 2022, it is the most frequently traded currency in the world, accounting for more than 88% of global forex sales, or an average of $6.6 trillion per day. After World War II, the US dollar took over the global reserve currency from the British pound. For much of its history, the US dollar was supported by gold, but in 1971 there was the Bretton Woods Agreement, which lost its gold standard.
The single most important factor affecting the value of the US dollar is monetary policy shaped by the Federal Reserve. The Fed has two tasks: achieving price stability (control inflation) and promoting full employment. The main tool to achieve these two goals is adjusting interest rates. When prices rise rapidly and inflation exceeds the Fed's 2% target, the Fed will raise interest rates and help the USD value. If inflation falls below 2% or the unemployment rate is too high, the Fed can lower interest rates, which is heavier on the greenback.
In extreme circumstances, the Federal Reserve could also print more dollars and enact quantitative easing (QE). QE is a process that dramatically increases the credit flow in the financial system where the Fed has been stuck. This is a non-standard policy measure used when credits run out (due to the fear of counterparty defaults) as banks are not lending to each other. If you're not likely to achieve the desired outcome simply by lowering your interest rates, this is a last resort. Fed combating the credit crunch that occurred during the 2008 financial crisis was a weapon of choice for the Fed. It involves printing Fed prints in more dollars and using them to buy US government bonds primarily from financial institutions. QE usually weakens the US dollar.
Quantitative tightening (QT) is the reverse process in which the Federal Reserve stops purchasing bonds from financial institutions and does not reinvest principal from mature bonds with new purchases. Usually, it's positive for US dollars.
