- UK’s GDP is set to decline for the second month in a row, raising the likelihood of a Bank of England rate cut in August to 78%.
- Trump intensifies the trade conflict by imposing a 35% tariff on Canadian imports, impacting market dynamics.
- Concerns about rate cuts and fiscal policies are weighing on the Sterling ahead of significant UK data next week.
GBP/USD has dropped slightly, down 0.59%, in response to the UK’s disappointing GDP projections. This trend hints at potential easing measures from the Bank of England. Amid these developments and the escalating trade tensions, the US dollar has gained strength. Currently, GBP/USD is trading at 1.3504 after hitting a high of 1.3584 earlier.
GBP/USD dips 0.59% as UK growth concerns rise and Trump imposes tariffs on Canada
Market sentiment soured following President Trump’s announcement of a trade letter directed at Canada, where he imposed a 35% tariff, with certain exemptions related to USMCA. This has led to a decline in risk appetite, resulting in a stronger dollar.
Adding to the uncertainty, Trump indicated that he might introduce blanket tariffs ranging from 15% to 20% for various trading partners.
The US Dollar Index (DXY), which measures the dollar’s performance against six major currencies, has increased by 0.26%, standing at 97.83.
Across the Atlantic, the UK’s GDP fell by 0.1% in May, following a 0.3% decline in April, as reported by the Office for National Statistics (ONS). This downturn signals weak performance in both industrial and construction sectors.
According to data from LSEG, the recent numbers have heightened expectations of the Bank of England cutting rates at its August meeting, increasing likelihoods from 64% to about 78.3% in just two weeks.
This situation adds pressure to British Prime Minister Rachel Reeves, who may need to consider raising taxes in the upcoming budget to address public account imbalances.
Next week, traders are keenly awaiting UK inflation and jobs reports, while in the US, the consumer price index (CPI) and retail sales data are also on the docket.
GBP/USD price forecast: A look ahead
The future trend of GBP/USD looks uncertain as the pair has fallen below the 20-day SMA at 1.3590 but remains just above the 50-day SMA at 1.3492. Current momentum appears to favor bearish sentiment, as indicated by the relative strength index (RSI).
If GBP/USD closes below 1.3500, it could lead to further declines. The immediate support level is at 1.3500, followed by the 50-day SMA. A breach here could expose the 100-day SMA near 1.3400 and 1.3248. Conversely, if the pair stays above 1.3500, buyers will need to challenge the resistance at 1.3600, above the 20-day SMA.
British pound prices this week
The table below outlines the performance of the British pound (GBP) against major currencies this week, showing it was strongest against the Japanese yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.70% | 1.10% | 2.21% | 0.64% | -0.27% | 0.84% | 0.33% | |
| EUR | -0.70% | 0.41% | 1.26% | -0.08% | -0.89% | 0.17% | -0.37% | |
| GBP | -1.10% | -0.41% | 0.82% | -0.47% | -1.29% | -0.23% | -0.90% | |
| JPY | -2.21% | -1.26% | -0.82% | -1.30% | -2.21% | -1.09% | -1.77% | |
| CAD | -0.64% | 0.08% | 0.47% | 1.30% | -0.88% | 0.24% | -0.44% | |
| AUD | 0.27% | 0.89% | 1.29% | 2.21% | 0.88% | 1.17% | 0.40% | |
| NZD | -0.84% | -0.17% | 0.23% | 1.09% | -0.24% | -1.17% | -0.67% | |
| CHF | -0.33% | 0.37% | 0.90% | 1.77% | 0.44% | -0.40% | 0.67% |
The following heatmap visualizes the rate of change for each major currency. The base currency is noted in the left column, while estimated currencies are across the top row. For instance, to see GBP against USD, refer to the intersection for the respective percentage change.
