- The pound's sterling will be traded carefully against its key peers within the UK's economic outlook.
- FOMC minutes showed on Wednesday that authorities were worried about deepening the risk of rising inflation.
- Investors are awaiting the UK retail sales report for January and the supplementary S&P Global UK/US PMI data for February, scheduled for Friday.
Poundsterling (GBP) has shown a complex performance against its key peers, with investors concerned about the UK's (UK) economic outlook. Bank of England (BOE) Governor Andrew Bailey warned this week that he expects economic growth to remain slower and that he sees the labor market as softer.
The UK currency tried to gain ground after the release of the UK Consumer Price Index (CPI) report, which was hotter than expected in January on Wednesday, but did not. Governor Bailey had already warned that a short-term increase in inflation could be expected due to volatile energy prices, but that is not sustainable.
The headline CPI rose 3% year over year, faster than the 2.8% estimate, with a December reading of 2.5%. During the same period, the core CPI, which excludes volatile components of food, energy, alcohol and tobacco, increased by 3.7% as expected, faster than previous 3.2% reading.
The acceleration of inflationary pressures must be temporary, but the BOE cannot further ease monetary policy. The central bank reduced its borrowing rate to 25 basis points (BPS) to 4.5% at a policy meeting held on February 6, leading to the prospect of relaxing its cautious policy.
Going forward, investors will focus on UK retail sales data for January and the February Flash S&P Global UK/US Purchasing Managers Index (PMI) report, which will be released on Friday.
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 US dollar.
| USD | EUR | GBP | JPY | CAD | aud | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.15% | -0.23% | -0.90% | -0.13% | -0.47% | -0.46% | -0.24% | |
| EUR | 0.15% | -0.07% | -0.77% | 0.02% | -0.32% | -0.31% | -0.11% | |
| GBP | 0.23% | 0.07% | -0.68% | 0.10% | -0.25% | -0.24% | -0.02% | |
| JPY | 0.90% | 0.77% | 0.68% | 0.78% | 0.45% | 0.41% | 0.66% | |
| CAD | 0.13% | -0.02% | -0.10% | -0.78% | -0.33% | -0.33% | -0.11% | |
| aud | 0.47% | 0.32% | 0.25% | -0.45% | 0.33% | 0.00% | 0.21% | |
| NZD | 0.46% | 0.31% | 0.24% | -0.41% | 0.33% | -0.01% | 0.22% | |
| CHF | 0.24% | 0.11% | 0.02% | -0.66% | 0.11% | -0.21% | -0.22% |
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).
Daily Digest Market Movement: Pound Sterling moves higher against USD as market sentiment improves
- Sterling in the pound is just above 1.2600 against the US Dollar (USD) in Thursday's European session. The GBP/USD pair gains because market sentiment is slightly favorable for risk-aware currency, and investors gain confidence that US President Donald Trump's tariff agenda will not be as feared as expected It's there.
- On Wednesday, Donald Trump announced that a trade deal with China was “possible.” His comments were optimistic despite announcing a 10% tariff on all imports from Asian countries earlier this month. On Tuesday, Trump also announced it plans to impose a 25% tariff on foreign automobiles, drugs and semiconductor imports. There is no detailed plan for all the tariff threats he has announced so far. Trump was expected to start taxing shortly after returning to the White House.
- Meanwhile, growing confidence in the potential Russian-Ukraine ceasefire has also improved the market mood. After discussing the issue with Russian diplomats in Saudi Arabia, not including Ukraine and Europe, President Trump confirmed that more talks will be held on the peace deal between Russia and the Ukrain. However, Ukraine has said it does not agree to the deal it was made.
- However, the outlook for the US dollar remains bright in terms of monetary policy. Minutes of the Federal Open Market Committee (FOMC) of the January meeting showed on Wednesday that the authorities are expected to maintain the current interest rates of 4.25% to 4.50% for a long time.
- Fed policymakers were more concerned about the risk of profits against inflation due to Trump's potential tariff policies than risks to the labor market. Additionally, FOMC minutes show that business owners are planning to take over the impact of higher input costs on consumers. Tariffs on important imports promote local production, but these products compete in terms of manufacturing costs given higher US (US) labor costs compared to the labor costs of trading partners. I don't have the strength.
- Such a scenario will increase inflationary pressure and prevent Federal Reserve officials from continuing the financial expansion cycle that began in September 2024 earlier.
Technical Analysis: Poundsterling aims to break EMA for over 100 days
Pound Sterling is moving up to nearly 1.2620 against the US dollar in European trading hours on Thursday. The GBP/USD pair falls from the mid-January to mid-January dropping beyond the Fibonacci retracement of 38.2%, matching the 100-day exponential moving average (EMA) around 1.2620.
The 14-day relative strength index (RSI) is struggling to exceed 60.00. If the RSI (14) cannot be maintained above that level, the bullish momentum will disappear.
Looking down, 1.2250 February Low acts as the pair's key support zone. The advantage is that 50% Fibonacci retracement at 1.2767 serves as a critical zone of resistance.
