- The Pound Sterling ticks lower to near 1.3300 against the US Dollar as the latter struggles to extend recovery.
- US-China trade uncertainty will likely keep investors on their toes.
- BoE officials stress the need to discount trade war risk in monetary policy decisions.
The Pound Sterling (GBP) trades slightly lower against the US Dollar (USD) marginally above 1.3300 during North American trading hours on Thursday. The GBP/USD pair ticks lower as the US Dollar (USD) attracts bids after the release of the upbeat United States (US) ISM Manufacturing Purchasing Managers’ Index (PMI) data for April. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, strives to settle above the fortnightly high around 100.00.
The ISM agency reported that the Manufacturing PMI came in higher at 48.7 vs. estimates of 48.0, but remained lower than the prior release of 49.0. Though the PMI data has outperformed expectations, a figure below 50.0 is still considered as contraction in activities. New Orders Index contracted at a moderate pace to 47.2 against the prior release of 45.2. Addiontaly, Employment Index also increased to 46.5 from 44.7.
The ISM Manufacturing Prices Paid, which gauges change in input cost, came in at 69.8. The input cost measure of the manufacturing sector missed estimates of 70.3 but exapnded at a faster pace from the former release of 69.4. Increasing input costs would feed consumer inflation that will limit the scope for the Federal Reserve (Fed) to reduce interest rates at a time when economy looks in need of a boost.
The US Q1 Gross Domestic Product (GDP) data showed on Wednesday that the economy shrank in the first quarter of the year by an annualized rate of 0.3%, mainly due to a substantial increase in imports. US importers frontloaded inputs from their foreign suppliers to escape the burden of higher tariffs imposed by US President Trump on April 2.
Earlier in the day, the US Dollar struggled to extend its two-day recovery, which was driven by hopes that fears of global disruption due to the imposition of additional tariffs by US President Donald Trump have peaked.
The USD rebounded after the White House signaled that it could announce bilateral trade deals with a number of trading partners in weeks. “Initial trade deals are to be announced in weeks, not months,” US Trade Representative Jamieson Greer said at Fox News, Reuters reported. However, he denied any trade discussion with China, which is still a concern for market participants, given the reliance of US industries on imports from the Asian giant.
Daily digest market movers: Pound Sterling moves higher against its peers
- The Pound Sterling bounces back against its major peers on Thursday in the European session. The British currency recovers despite fears that the global trade war will hurt the United Kingdom’s (UK) economic outlook.
- There is a great chance that the UK will have a trade deal with Washington, and the impact of reciprocal tariffs by Donald Trump will be insignificant, given that the additional duty is 10%, the lowest among US trading partners. However, the major threat for the UK will be intense competition with other nations, assuming that Trump’s protectionist policies will force his trading partners to sell their products in other territories at lower prices.
- Bank of England (BoE) officials, including Governor Andrew Bailey, have warned that the central bank should consider global trade war risk in the fallout of Trump’s tariffs. "We do have to take very seriously the risk to growth,” Bailey said last week. Separately, BoE Deputy Governor Clare Lombardelli expressed concerns over trade policy uncertainty and stressed that it is “prudent” to consider “persistent risks” while making monetary policy decisions, Bloomberg reports.
- Increasing global economic uncertainty has forced traders to raise bets supporting the BoE to cut interest rates in the policy meeting on May 8. The BoE is almost certain to reduce borrowing rates by 25 basis points (bps) to 4.25%.
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 Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.30% | 0.10% | 1.32% | 0.05% | 0.33% | 0.36% | 0.51% | |
| EUR | -0.30% | -0.20% | 1.03% | -0.28% | 0.03% | 0.07% | 0.20% | |
| GBP | -0.10% | 0.20% | 1.22% | -0.05% | 0.23% | 0.26% | 0.40% | |
| JPY | -1.32% | -1.03% | -1.22% | -1.28% | -0.99% | -1.01% | -0.88% | |
| CAD | -0.05% | 0.28% | 0.05% | 1.28% | 0.29% | 0.31% | 0.45% | |
| AUD | -0.33% | -0.03% | -0.23% | 0.99% | -0.29% | 0.03% | 0.18% | |
| NZD | -0.36% | -0.07% | -0.26% | 1.01% | -0.31% | -0.03% | 0.14% | |
| CHF | -0.51% | -0.20% | -0.40% | 0.88% | -0.45% | -0.18% | -0.14% |
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).
Technical Analysis: Pound Sterling strives to hold 1.3300
The Pound Sterling retraces to near 1.3330 against the US Dollar from the three-year high of 1.3445. However, the overall outlook of the pair remains bullish as all short-to-long Exponential Moving Averages (EMAs) are sloping higher.
The 14-day Relative Strength Index (RSI) falls inside the 40.00-60.00 range, indicating that the bullish momentum is over for now. However, the upside bias still prevails.
On the upside, the round level of 1.3600 will be a key hurdle for the pair. Looking down, the April 3 high around 1.3200 will act as a major support area.
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