The Pound Sterling (GBP) strengthened yesterday as the Bank of England sent some hawkish signals while cutting rates by 25bp. The announcement of the UK-US trade deal later in the day added some support to the pound, but that was short-lived, ING's FX analyst Francesco Pesole notes
UK-US trade deal adds support to GBP
"The deal had already been largely priced in, and the implications for the UK economy are not significant. That said, the UK has now signed two trade deals in quick succession (with India and the US), and that is keeping markets hopeful on trade talks with the EU – which would have much more meaningful implications for the UK, and can lend a hand to troubled British finances."
"When it comes to the BoE, the hawkish surprises came both from the vote split and the details in the statement. There were four dissenters to the 25bp decision, two voting for a 50bp reduction and two for a hold. In the hawkish camp were Catherine Mann, a long-time hawk who had (very surprisingly) voted for a 50bp cut earlier this year, and most importantly, Huw Pill, the BoE’s Chief Economist. That resounded more with markets than the two 50bp cut votes, as the statement also seemed to lean on the cautious side. The guidance is unchanged, with further easing steps still set to be 'gradual and careful', and growth forecasts were not revised lower as some had expected."
"The proximity to the 19 May EU-UK summit can keep markets on the bearish side of EUR/GBP. Calmer risk sentiment and positioning imbalances (EUR is more overbought than GBP) should also keep the pair pressured. A test of the big 0.840 support (where 100-day and 200-day moving averages converge) is a tangible possibility in the coming weeks."
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD: Bears await break below 1.1200 ahead of US-China joint statement
EUR/USD attracts some sellers on Monday, though it lacks bearish conviction. A break below 200-period SMA on H4 should pave the way for deeper losses. Any attempted move up is likely to confront a stiff barrier near the 1.1250 region.
GBP/USD trades with negative bias below 1.3300 amid modest USD strength
GBP/USD attracts some sellers as the US-China trade deal eases US recession fears and boosts the USD. The US-UK trade agreement and the BoE’s cautious tone support the GBP and limit losses for the major. Traders now look forward to speeches from BoE officials and FOMC members for some meaningful impetus.
Gold price struggles near one-week low; US-China joint statement awaited
Gold price kicks off the new week on a weaker note in reaction to the optimism over the US-China trade deal. Easing US recession fears and the Fed’s hawkish pause underpin the USD, and further weigh on the commodity. The XAU/USD bears await details on the US-China agreement before positioning for any meaningful downside.
Ripple turns green amid waning exchange inflows
Ripple price continues its upward trajectory, trading at $2.40 on Monday, fuelled by a widespread bullish surge spearheaded by Bitcoin breaking past the $100,000 mark last week. Multiple buy signals suggest that XRP can potentially extend the rally, targeting $3.00 in the coming days.
Why the UK-US trade deal won’t herald a wider tariff climbdown
For Britain, the UK-US deal secures lower tariffs without compromising forthcoming UK-EU talks. And for the US, it signals to investors that the administration is prepared to be flexible on tariffs. But we're sceptical that the deal will translate into a much wider de-escalation in US tariff policy.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.