Pound Sterling weakens against US Dollar on positive Trump-Xi trade talks
- The Pound Sterling gives back early gains and turns slightly lower to near 1.3180 against the US Dollar.
- The US Dollar rebounds after China confirms it will resume rare earth exports to Washington.
- On Wednesday, the Fed reduced interest rates and downplayed hopes for further monetary expansion this year.
The Pound Sterling (GBP) drops to near 1.3185 against the US Dollar (USD) during the European trading session on Thursday. The GBP/USD pair faces pressure as the US Dollar has recovered its early losses, following comments from United States (US) President Donald Trump and China’s commerce ministry after the meeting between Trump and Chinese leader Xi Jinping.
At the press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, rises to near 99.25.
After trade talks with Chinese leader Xi, US President Trump has claimed that the “meeting with Xi was amazing”. He said, “On a scale of 1 to 10, the meeting with Xi was a 12”. Trump further added that tariffs on China will be 47% – down from 57% – there will be no roadblocks on rare earth exports to Washington, and the purchase of soyabeans by Beijing will begin immediately.
In response, the Chinese commerce ministry has stated that Beijing will suspend export control measures announced on October 9 for a year, and will expand agricultural trade with Washington.
Signs of an improving US-China trade relationship are favorable for the US Dollar.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.18% | -0.02% | 0.65% | 0.03% | -0.04% | -0.15% | -0.16% | |
| EUR | 0.18% | 0.15% | 0.86% | 0.21% | 0.13% | 0.03% | 0.02% | |
| GBP | 0.02% | -0.15% | 0.65% | 0.05% | -0.02% | -0.13% | -0.14% | |
| JPY | -0.65% | -0.86% | -0.65% | -0.63% | -0.70% | -0.83% | -0.85% | |
| CAD | -0.03% | -0.21% | -0.05% | 0.63% | -0.06% | -0.18% | -0.19% | |
| AUD | 0.04% | -0.13% | 0.02% | 0.70% | 0.06% | -0.10% | -0.12% | |
| NZD | 0.15% | -0.03% | 0.13% | 0.83% | 0.18% | 0.10% | 0.01% | |
| CHF | 0.16% | -0.02% | 0.14% | 0.85% | 0.19% | 0.12% | -0.01% |
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 US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Daily digest market movers: Fed's Powell says December rate cut is far from assured
- The Pound Sterling gains a temporary ground against the US Dollar on Thursday after revisiting an almost six-month low around 1.3140 the previous day. The Cable fell sharply on Wednesday after the Federal Reserve (Fed) decision to reduce interest rates by 25 basis points (bps) to 3.75%-4.00%.
- This was the second straight interest rate cut by the Fed this year. The central bank was expected to announce a dovish interest rate decision, as recent US Consumer Price Index (CPI) data release has signaled that the impact of tariffs on inflation is not persistent. Additionally, deteriorating labor market conditions and the ongoing federal shutdown remained key reasons behind the Fed’s rate cut announcement.
- Fed Chairman Jerome Powell also stated that the cut was “risk management” as the job creation has remained “very low”.
- Technically, lower interest rates by the Fed bode poorly for the US Dollar; however, the Greenback strengthened after Chair Powell argued against further monetary easing in the December policy meeting. “Another cut in December is far from assured, as inflation remains somewhat elevated relative to the goal,” he said.
- Powell's comments signaling no support for an interest rate cut in December led investors to revise their dovish expectations. According to the CME FedWatch tool, traders see a 70% chance that the Fed will hold interest rates steady in the range of 3.75%-4.00% in December, significantly increased from 9.1% seen on Tuesday.
- In the United Kingdom (UK), the major trigger for the British currency will be expectations regarding the upcoming Bank of England’s (BoE) monetary policy scheduled next week. Analysts at Goldman Sachs wait for the BoE to cut interest rates by 25 bps to 3.75% on November 6. The investment banking firm turns dovish for November’s monetary policy due to the softening labor market.
- Contrary to Goldman Sachs, a recent Reuters poll showed that economists expect there will be no further interest rate cuts by the BoE this year, and the central bank will restart the monetary-easing campaign in the first quarter of 2026.
Technical Analysis: Pound Sterling trades below 200-day EMA
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The Pound Sterling ticks down to near 1.3185 against the US Dollar on Thursday. The GBP/USD pair struggles to gain ground after refreshing an almost six-month low near 1.3140 on Wednesday. The outlook for the cable remains bearish as it trades below the 200-day Exponential Moving Average (EMA), which is around 1.3295.
The 14-day Relative Strength Index (RSI) falls below 40.00, indicating that a fresh bearish momentum has emerged.
Looking down, the psychological level of 1.3000 will act as a key support zone. On the upside, the October 28 high around 1.3370 will act as a key barrier.
BoE FAQs
The Bank of England (BoE) decides monetary policy for the United Kingdom. Its primary goal is to achieve ‘price stability’, or a steady inflation rate of 2%. Its tool for achieving this is via the adjustment of base lending rates. The BoE sets the rate at which it lends to commercial banks and banks lend to each other, determining the level of interest rates in the economy overall. This also impacts the value of the Pound Sterling (GBP).
When inflation is above the Bank of England’s target it responds by raising interest rates, making it more expensive for people and businesses to access credit. This is positive for the Pound Sterling because higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls below target, it is a sign economic growth is slowing, and the BoE will consider lowering interest rates to cheapen credit in the hope businesses will borrow to invest in growth-generating projects – a negative for the Pound Sterling.
In extreme situations, the Bank of England can enact a policy called Quantitative Easing (QE). QE is the process by which the BoE substantially increases the flow of credit in a stuck financial system. QE is a last resort policy when lowering interest rates will not achieve the necessary result. The process of QE involves the BoE printing money to buy assets – usually government or AAA-rated corporate bonds – from banks and other financial institutions. QE usually results in a weaker Pound Sterling.
Quantitative tightening (QT) is the reverse of QE, enacted when the economy is strengthening and inflation starts rising. Whilst in QE the Bank of England (BoE) purchases government and corporate bonds from financial institutions to encourage them to lend; in QT, the BoE stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive for the Pound Sterling.
Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
