GBP/USD edges up on UK-EU deal but capped by Fed hawkishness

Source Fxstreet
  • GBP/USD underpinned by UK-EU “reset” agreement and BoE’s Huw Pill pushing back on fast rate-cut pace.
  • Market sees BoE holding in June; 41 bps of easing priced by year-end.
  • US tax bill raises debt fears; DXY dips after Moody’s downgrade, but Treasury yields firm on Fed caution.

The Pound Sterling registered modest gains versus the US Dollar on Tuesday, capped by the rise of US Treasury bond yields as news of a UK-EU trade agreement boosts the prospects of the UK’s currency. Nevertheless, the Federal Reserve’s hawkish stance kept the GBP/USD from reaching the 1.3400 figure, and it traded at 1.3371 at the time of writing.

GBP/USD stays firm as upbeat UK news meets resistance from rising US yields and cautious Fed tone

News that the UK and the Eurozone (EU) struck an agreement to “reset” relations post-Brexit underpinned Cable. Additionally, Bank of England (BoE) Chief Economist Huw Pill was hawkish, stating that “the dissenting vote stems from a concern that the pace of withdrawal of monetary policy restrictions since last summer – quarterly cuts of 25bp – is too rapid, given the balance of risks to price stability."

Market players expect the BoE to hold rates at 4.25% at the June meeting, though they had priced in 41 basis points (bps) of easing towards the end of the year.

Across the pond, the US Congress continues to discuss passing the Trump tax bill, which so far hurdled the House Budget Committee. According to Reuters, “Nonpartisan analysts say the bill would add $3 trillion to $5 trillion to the nation's $36.2 trillion in debt over the next decade.”

In the meantime, the Greenback continued to recover following Moody’s downgrade of the US government debt rating from AAA to AA1, citing concerns about reducing the budget deficit.

The US Dollar Index (DXY), which tracks the buck’s value against a basket of six currencies, is down 0.16% at 100.22.

In the meantime, traders’ eyes are on the release of the UK’s inflation data on Wednesday. Later, St. Louis Fed President Alberto Musalem and Fed Governor Adriana Kugler are expected to make headlines.

GBP/USD Price Forecast: Technical outlook

The GBP/USD paused its uptrend despite remaining bullish, as portrayed by the Relative Strength Index (RSI). The RSI favors buyers, but they must clear the 1.3400 level before challenging the year-to-date (YTD) peak of 1.3443, which is followed by a target of 1.3500.

Conversely, if GBP/USD tumbles below 1.3350, the first support would be 1.3300. Once surpassed, the next stop is 1.3250, 1.3200, and the 50-day Simple Moving Average (SMA) at 1.3122.

British Pound PRICE This week

The table below shows the percentage change of British Pound (GBP) against listed major currencies this week. British Pound was the strongest against the Australian Dollar.

USD EUR GBP JPY CAD AUD NZD CHF
USD -0.66% -0.62% -0.46% -0.16% 0.07% -0.38% -0.66%
EUR 0.66% 0.02% 0.24% 0.56% 0.86% 0.34% 0.00%
GBP 0.62% -0.02% -0.08% 0.56% 0.84% 0.32% -0.01%
JPY 0.46% -0.24% 0.08% 0.31% 0.71% 0.29% -0.13%
CAD 0.16% -0.56% -0.56% -0.31% 0.25% -0.24% -0.53%
AUD -0.07% -0.86% -0.84% -0.71% -0.25% -0.52% -0.84%
NZD 0.38% -0.34% -0.32% -0.29% 0.24% 0.52% -0.33%
CHF 0.66% -0.01% 0.01% 0.13% 0.53% 0.84% 0.33%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).

Disclaimer: For information purposes only. Past performance is not indicative of future results.
placeholder
Natural Gas sinks to pivotal level as China’s demand slumpsNatural Gas price (XNG/USD) edges lower and sinks to $2.56 on Monday, extending its losing streak for the fifth day in a row. The move comes on the back of China cutting its Liquified Natural Gas (LNG) imports after prices rose above $3.0 in June. It
Author  FXStreet
Jul 01, 2024
Natural Gas price (XNG/USD) edges lower and sinks to $2.56 on Monday, extending its losing streak for the fifth day in a row. The move comes on the back of China cutting its Liquified Natural Gas (LNG) imports after prices rose above $3.0 in June. It
placeholder
Bitcoin Outlook 2025As the Bitcoin market continues to mature, its 2025 outlook appears highly favourable, driven by institutional adoption and regulatory developments.
Author  TradingKey
Jan 23, Thu
As the Bitcoin market continues to mature, its 2025 outlook appears highly favourable, driven by institutional adoption and regulatory developments.
placeholder
What Crypto Whales are Buying For May 2025Crypto whales are making bold moves heading into May 2025, and three tokens are standing out: Ethereum (ETH), Artificial Superintelligence Alliance (FET), and Onyxcoin (XCN).
Author  Beincrypto
Apr 21, Mon
Crypto whales are making bold moves heading into May 2025, and three tokens are standing out: Ethereum (ETH), Artificial Superintelligence Alliance (FET), and Onyxcoin (XCN).
placeholder
Analysts Highlight 4 Reasons Why ETH Price Could Rebound Strongly in MayEthereum (ETH) has declined for five consecutive months. However, it enters May with rising optimism.
Author  Beincrypto
May 07, Wed
Ethereum (ETH) has declined for five consecutive months. However, it enters May with rising optimism.
placeholder
XRP spot ETF approval odds surge to 92% for 2025The 2025 XRP Spot ETF approval odds increase to 92% amid a shift in market sentiment.
Author  Cryptopolitan
Jun 04, Wed
The 2025 XRP Spot ETF approval odds increase to 92% amid a shift in market sentiment.
Related Instrument
goTop
quote