-
Pound Sterling drops as BoE's Bailey emphasizes the serious trade risks to growth.
-
US Treasury Secretary Bessent anticipates a tariff reduction between the US and China.
-
Investors await the US Durable Goods Orders and UK Retail Sales data for March.
The Pound Sterling (GBP) falls against most currencies, except for North American ones, on Thursday, as investors grow wary of the UK's economic outlook amid recent tariffs imposed by US President Donald Trump.
Bank of England (BoE) Governor Andrew Bailey expressed concerns about economic growth, emphasizing the need to seriously consider trade war risks. "We must take the risk to growth very seriously," Bailey said during the IMF spring meetings on Wednesday. With the May policy meeting approaching, traders increasingly expect the BoE to cut rates by 25 basis points to 4.25%.
The IMF has forecasted three rate cuts by the BoE this year and revised the UK's 2025 GDP growth down to 1.1%, from 1.6%, due to global uncertainties stemming from Trump's policies, according to BBC News.
Investors will focus on the UK Retail Sales data for March, set for release on Friday. Retail sales are expected to have dropped by 0.4% month-on-month after a 1% increase in February. Year-on-year, consumer spending is anticipated to rise at a moderate pace of 1.8%, down from 2.2% previously.
Daily Digest Market Movers: Pound Sterling Rebounds Against US Dollar
- The Pound Sterling rises to near 1.3300 against the US Dollar (USD) during Thursday's European session, recovering after a two-day pullback. The GBP/USD pair rebounds as the USD struggles to extend its recovery, with the US Dollar Index (DXY), which tracks the Greenback against six major currencies, facing pressure near the psychological 100.00 level.
- Earlier this week, the USD gained strength following comments from US President Donald Trump, who softened his stance on trade relations with China and backed away from threats to fire Federal Reserve (Fed) Chair Jerome Powell. This shift in tone led to a re-evaluation of the US Dollar’s "safe-haven" status.
- Additionally, reduced concerns over a potential trade war with China provided further support to the USD. On Tuesday, Trump indicated that US-China trade discussions were progressing well, expressing optimism about reaching a deal. US Treasury Secretary Scott Bessent echoed this sentiment on Wednesday, suggesting that both nations would reduce recently imposed tariffs.
- On the economic front, attention is now on the US Durable Goods Orders data for March, set to be released at 12:30 GMT. Orders are expected to show strong growth, with an anticipated 2% increase compared to February’s 1% rise.
Technical Analysis: Pound Sterling Rebounds from 1.3240
The Pound Sterling recovers to near 1.3300 against the US Dollar during European trading hours on Wednesday. The pair's outlook remains positive, with all short-to-long Exponential Moving Averages (EMAs) trending higher.
The 14-day Relative Strength Index (RSI) cools to around 65.00 after reaching overbought conditions, signaling a mild correction after a strong rally, though the upward trend remains intact.
On the upside, the psychological level of 1.3500 is a key resistance, while the April 3 high of around 1.3200 will provide major support.
