- The Pound Sterling rises to near 1.2800 against the US Dollar as investors expect the US-China trade war to lead the US to a recession.
- US President Trump increased reciprocal tariffs on China to 104% against Beijing’s retaliation.
- Deutsche Bank expects the BoE to cut interest rates by 50 bps in May.
The Pound Sterling (GBP) weakens against its major peers on Wednesday. Investors brace for more volatility in the British currency ahead as protectionist policies by United States (US) President Trump have stemmed the risks of a global recession. Analysts at JPMorgan believe the rapid escalation with US tariffs on China is disruptive enough to push the global economy into a recession.
China is known as the world’s manufacturing hub, given its competitive advantage in labor cost and supportive government policies. Financial market participants worry that Chinese firms will look for other markets to sell their products if its trade war with the US brews further. Such a scenario will be unfavorable for Europe as it seems incapable of battling a price war against China.
During European trading hours, the Bank of England’s (BoE) Financial Policy Committee (FPC) also warned that a major shift in global trading arrangements could harm “financial stability by depressing growth”.
Meanwhile, traders have raised BoE dovish bets amid fears that Trump’s tariff policy could send shockwaves through the United Kingdom (UK) economy. Analysts at Deutsche Bank expect that the BoE may consider a more “forceful” response to current economic conditions and deliver a larger-than-usual interest rate cut of 50 basis points (bps) in the May policy meeting. The central bank identified a substantial decline in survey activity indicators, unwarranted tightening of financial conditions, and fears of labor market slowdown as key reasons behind the BoE’s ultra-dovish decision.
This week, investors will focus on the monthly Gross Domestic Product (GDP) and the factory data for February, which will be released on Friday. The UK economy is expected to have grown by 0.1% after contracting at a similar pace in January.
British Pound 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 US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.78% | -0.19% | -0.99% | -0.37% | -0.63% | -0.27% | -0.98% | |
| EUR | 0.78% | 0.59% | -0.21% | 0.38% | 0.20% | 0.51% | -0.22% | |
| GBP | 0.19% | -0.59% | -0.78% | -0.19% | -0.38% | -0.07% | -0.79% | |
| JPY | 0.99% | 0.21% | 0.78% | 0.58% | 0.40% | 0.69% | -0.02% | |
| CAD | 0.37% | -0.38% | 0.19% | -0.58% | -0.09% | 0.11% | -0.60% | |
| AUD | 0.63% | -0.20% | 0.38% | -0.40% | 0.09% | 0.31% | -0.42% | |
| NZD | 0.27% | -0.51% | 0.07% | -0.69% | -0.11% | -0.31% | -0.72% | |
| CHF | 0.98% | 0.22% | 0.79% | 0.02% | 0.60% | 0.42% | 0.72% |
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 trims gains against US Dollar
- The Pound Sterling gives up significant intraday gains against the US Dollar (USD) in Wednesday’s European session, but is still trading higher around 1.2800. The GBP/USD pair gains as the US Dollar faces selling pressure amid firming expectations that the US could enter a recession this year. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, plummets to near 102.00.
- A fresh escalation in the trade war between the US and China has prompted risks of a recession in the US. During the European trading session, China announced additional 50% tariffs on the US over the 34% imposed last week, and all will become effective from April 10. Hefty import duties have been slapped by China on the US to match reciprocal tariffs increased by President Donald Trump on Tuesday. Trump raised reciprocal levies on Beijing for retaliation and currency manipulation to offset the impact of higher duties.
- Additionally, accelerating Federal Reserve (Fed) dovish bets due to increasing risks of a US recession have also weighed on the US Dollar. According to a CME FedWatch tool, the central bank’s probability of cutting interest rates in May has increased to 52.5% from 10.6% recorded a week ago.
- For more cues on the monetary policy outlook, investors will focus on the Federal Open Market Committee (FOMC) minutes of the March policy meeting, which will be published at 18:00 GMT. In the policy meeting, the Fed left interest rates steady in the range of 4.25%-4.50%, and officials collectively maintained their guidance for two interest rate cuts this year.
- This week, investors will also focus on the US Consumer Price Index (CPI) data for March, which will be released on Thursday.
Technical Analysis: Pound Sterling rises to near 1.2800
The Pound Sterling gains to near 1.2800 against the US Dollar on Wednesday but struggles to reclaim the 20-day Exponential Moving Average (EMA), which trades around 1.2877.
The 14-day Relative Strength Index (RSI) rebounds after falling to near 40.00. A fresh bearish momentum could be triggered if the RSI fails to hold the 40.00 level.
Looking down, the 38.2% Fibonacci retracement plotted from late September high to mid-January low near 1.2610 will act as a key support zone for the pair. On the upside, the psychological figure of 1.3000 will act as a key resistance zone.
(This story was corrected at 10:07 GMT to say that the Federal Open Market Committee (FOMC) minutes of the March policy meeting will be published at 18:00 GMT, not 19:00 GMT.)
Economic Indicator
Gross Domestic Product (MoM)
The Gross Domestic Product (GDP), released by the Office for National Statistics on a monthly and quarterly basis, is a measure of the total value of all goods and services produced in the UK during a given period. The GDP is considered as the main measure of UK economic activity. The MoM reading compares economic activity in the reference month to the previous month. Generally, a rise in this indicator is bullish for the Pound Sterling (GBP), while a low reading is seen as bearish.