GBP/USD hovers near six-month highs, 1.3300, eyes on US-UK trade discussions

• GBP/USD rises as the US Dollar comes under pressure amid growing worries over the economic fallout from US tariffs.

• Federal Reserve Chair Jerome Powell warned that a sluggish economy paired with persistent inflation could elevate the risk of stagflation.

• UK Chancellor of the Exchequer Rachel Reeves is set to hold talks with US officials next week to push forward trade deal negotiations.

GBP/USD continues its upward momentum from April 8, trading near 1.3280 during Friday's Asian session. The pair is buoyed by a weakening US Dollar (USD), as concerns grow over the economic impact of tariffs on the United States. While market participants monitor developments in US trade talks, trading activity is expected to remain light due to the Good Friday holiday.

The USD found some support after hawkish remarks from Federal Reserve Chair Jerome Powell, who cautioned that a sluggish economy coupled with persistent inflation could challenge the Fed’s dual mandate and increase stagflation risks. According to the CME FedWatch Tool, traders are pricing in around 86 basis points of rate cuts by the end of 2025, with the first expected in July.

On the data front, the US Department of Labor reported that Initial Jobless Claims fell to 215,000 for the week ending April 12, beating expectations and down from a revised 224,000 the previous week. However, Continuing Claims rose by 41,000 to 1.885 million for the week ending April 5.

UK Chancellor of the Exchequer Rachel Reeves plans to meet with US officials next week to advance trade deal discussions. The Telegraph reports that the White House believes a deal could be finalized “within three weeks.”

UK economic data has shown signs of resilience, with strong wage growth and improving GDP figures. However, easing inflation is fueling expectations of rate cuts from the Bank of England (BoE). March CPI slowed to 2.6% year-over-year, below forecasts, while monthly inflation edged down to 0.3%. Core services inflation, a key BoE gauge, dipped to 4.7%.