- GBP/USD reached a fresh six-month high at 1.3256 on Wednesday.
- Markets have largely priced in a 90% probability of a rate cut in May, according to interest rate futures.
- The upcoming US Retail Sales data could offer fresh insight into the impact of tariff concerns on consumer behavior.
The GBP/USD pair continues its winning streak that began on April 8, trading around 1.3250 during Wednesday’s Asian session. Earlier in the day, it touched a fresh six-month high at 1.3256. The pair has maintained strong momentum, boosted by improved global risk sentiment after US President Donald Trump announced exemptions for key technology products from his new “reciprocal” tariffs.
In the UK, labor market data showed on Tuesday that the unemployment rate held steady at 4.4% in February, in line with expectations. Wage growth, however, remained robust, maintaining pressure on the Bank of England (BoE).
The BoE has refrained from easing monetary policy, citing persistent wage strength. Nonetheless, interest rate futures suggest that markets have already priced in a 90% probability of a rate cut in May, with expectations for two additional cuts later this year.
All eyes are now on the UK Consumer Price Index (CPI) data for March, due later on Wednesday. Economists forecast core CPI—which excludes food and energy—to remain stable at 3.5% year-over-year.
Meanwhile, the US Dollar Index (DXY), which measures the US Dollar against a basket of six major currencies, is trading lower near 99.80. Later in the day, the focus will shift to US Retail Sales data for March, which could offer fresh insight into the impact of tariff concerns on consumer behavior.
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
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
AUD/USD holds above mid-0.6300s amid mixed fundamental cues
AUD/USD consolidates near the weekly low touched on Wednesday amid fading optimism over a quick resolution to the US-China trade dispute. Moreover, easing concerns about the Fed's independence assists the USD to preserve its recovery gains registered over the past two days and acts as a headwind for the currency pair.
EUR/USD strengthens above 1.1300 on gloomy Fed’s Beige Book
The EUR/USD pair edges higher to around 1.1335 during the early Asian session on Thursday. Mitigating concerns over potential tariff threats by US President Donald Trump exerts some selling pressure on the US Dollar.
Gold corrected extreme conditions, struggles around $3,300
Gold extended its decline on Wednesday, slipping below the $3,300 mark per troy ounce in response to reports from the media suggesting the Trump administration is weighing tariff reductions on Chinese goods, a news that revived hopes of easing trade tensions and reduced demand for the yellow metal as a safe-haven asset.
TRUMP meme coin rallies following announcement of President Trump's upcoming dinner with top 220 holders
Official TRUMP rallied 50% on Wednesday after the team behind the meme coin announced plans for its top 220 token holders to have a dinner with President Donald Trump in May. The announcement also included an extension of the token's initial unlock plan by an additional 90 days.
Five fundamentals for the week: Traders confront the trade war, important surveys, key Fed speech Premium
Will the US strike a trade deal with Japan? That would be positive progress. However, recent developments are not that positive, and there's only one certainty: headlines will dominate markets. Fresh US economic data is also of interest.
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.