The British Pound was weaker against the United States Dollar on Tuesday but overall continues the sideways trading which has dogged it since the Bank of England’s June policy meeting.
That resulted in no change to interest rates, but inflation seems to be relaxing quite markedly now and the market won’t be surprised to see borrowing costs fall in August. This prospect is naturally keeping a lid on any upside for Sterling across the board and not just against the Dollar.
However, this week’s focus is likely to be on the ‘USD’ side of GBP/USD, with Federal Reserve Chair Jerome Powell due to speak later in the day, and minutes from the last rate-setting meet due for release on Wednesday. These will set the scene for Friday’s blockbuster – the official non-farm payrolls report.
For its part the Dollar has seen a modest bounce as markets continue to fret the uncertainties attendant on a possible second Presidency for Donald Trump, with the prospect of increased tariffs should he return giving benchmark bond yields a boost and hurting risk appetite.
Still, the market remains reasonably confident that the Fed will start cutting its own interest rate in September, and, although it’s likely to proceed cautiously from there, the prospect also keeps Dollar bulls in check.
For now Sterling is on the back foot, although it has pared some of the losses seen earlier Tuesday in Asia. The UK’s General Election will take place on Thursday, but it seems to be having little effect on the currency, with victory for the opposition Labour Party in the price.
GBP/USD Technical Analysis
