Pound Sterling Outperforms US Dollar Amid Firm Fed Dovish Bets
- The Pound Sterling gains against the US Dollar on upbeat UK Retail Sales, and flash S&P Global PMI data.
- Soft US inflation eases the path for the Fed to reduce interest rates further.
- US President Trump expresses confidence in reaching a trade deal with China.
The Pound Sterling (GBP) outperforms its peers at the start of the week due to upbeat United Kingdom (UK) Retail Sales and positive flash S&P Global Purchasing Managers’ Index (PMI) data released on Friday.
The Office for National Statistics (ONS) reported that Retail Sales, a key measure of consumer spending, surprisingly rose by 0.5% on a monthly basis, while these were expected to decline by 0.2%. Also, the UK’s private sector business activity expanded at a faster pace due to a strong rebound in the manufacturing sector. The Manufacturing PMI rose to 49.6 from estimates of 46.6. Still, despite the increase, the data continued to suggest a contraction in factory activity as the figure remained below the 50.0 threshold. The overall composite PMI, however, increased to 51.1..
Upbeat consumer spending and business activity growth should provide some relief to Bank of England (BoE) officials. However, the report also showed that jobs continue to be cut amid a backdrop of business confidence that remains subdued by historical standards, which remained a key concern for policymakers.
In mid-October, traders raised BoE dovish bets after the release of weak employment data for the three months ending in August. The labor market report showed that the ILO Unemployment Rate rose to 4.8%, the highest rate since mid-2021.
Pound Sterling Price Today
The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.09% | -0.27% | -0.08% | -0.12% | -0.67% | -0.22% | 0.04% | |
| EUR | 0.09% | -0.14% | 0.02% | -0.01% | -0.54% | -0.14% | 0.17% | |
| GBP | 0.27% | 0.14% | 0.18% | 0.14% | -0.38% | 0.02% | 0.31% | |
| JPY | 0.08% | -0.02% | -0.18% | -0.05% | -0.60% | -0.14% | 0.13% | |
| CAD | 0.12% | 0.01% | -0.14% | 0.05% | -0.55% | -0.10% | 0.19% | |
| AUD | 0.67% | 0.54% | 0.38% | 0.60% | 0.55% | 0.41% | 0.71% | |
| NZD | 0.22% | 0.14% | -0.02% | 0.14% | 0.10% | -0.41% | 0.28% | |
| CHF | -0.04% | -0.17% | -0.31% | -0.13% | -0.19% | -0.71% | -0.28% |
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).
Daily digest market movers: Pound Sterling rebounds against US Dollar
- The Pound Sterling snaps a six-day losing streak against the US Dollar (USD) on Monday, and rises to near 1.3350 during the European trading session. The GBP/USD pair gains as the US currency falls due to intensified speculation that the Federal Reserve (Fed) will cut interest rates in the monetary policy announcement on Wednesday.
- At the time of writing, the US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, trades 0.1% lower to near 98.80.
- According to the CME FedWatch tool, traders have almost priced in a 25-basis-point (bps) reduction in interest rates to 3.75%-4.00%. This would be the second straight interest-rate cut by the Fed.
- Meanwhile, slowing US inflation has also provided room for the Fed to focus more on improving job demand. The Consumer Price Index (CPI) report for September showed on Friday that monthly headline and core inflation – which excludes volatile food and energy items – rose at a moderate pace of 0.3% and 0.2%, respectively.
- On the global front, accelerating hopes of a trade deal between the US and China are providing support to the US Dollar. US President Donald Trump has expressed confidence, during Monday's Asian trading session, that Washington and Beijing will reach a deal after his meeting with Chinese leader Xi Jinping later this week. “I think we'll come away with a deal from Xi meeting,” Trump said to reporters at Air Force One.
- Earlier, US Treasury Secretary Scott Bessent also signaled that Washington and Beijing will reach a deal soon after his meeting with Chinese Vice Premier He Lifeng at the sidelines of the Association of Southeast Asian Nations (ASEAN) summit in Malaysia over the weekend. Bessent stated that 100% additional tariffs imposed on Beijing won’t proceed, and export controls by them on rare earth minerals would be deferred.
Technical Analysis: Pound Sterling snaps six-day losing streak against US Dollar
(Click on image to enlarge)
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The Pound Sterling struggles to gain ground against the US Dollar near the 12-day low around 1.3310 on Monday. The overall trend of the GBP/USD pair is uncertain as it wobbles near the 200-day Exponential Moving Average (EMA), which trades around 1.3300.
The 14-day Relative Strength Index (RSI) stays near 40.00. A fresh bearish momentum would emerge if the RSI drops below that level.
Looking down, the August 1 low of 1.3140 will act as a key support zone. On the upside, the psychological level of 1.3500 will act as a key barrier.
More By This Author:
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Pound Sterling Wobbles Against US Dollar As Focus Shifts To US Inflation
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