Pound Sterling gains against USD despite US-Japan trade agreement confirmation
- The Pound Sterling trades firmly against the US Dollar as investors overlook the confirmation of the US-Japan trade deal.
- Trump reduces tariffs on Japan to 15% from 25% previously announced.
- UK government borrowed second-highest amount of funds in June since 1993.
The Pound Sterling (GBP) gains against its peers, except antipodeans, on Wednesday. The British currency attracts bids even as United Kingdom (UK) fiscal risks have resurfaced, following the government borrowings report from the Office for National Statistics (ONS) on Tuesday.
The report showed that the administration raised the second-highest amount of funds since 1993 in order to mitigate the increase in debt costs, which accelerated due to higher inflation. Mounting UK borrowings pave the way for tax increases by the administration in its upcoming Autumn Statement.
Meanwhile, investors await the release of preliminary S&P Global Purchasing Managers’ Index (PMI) data of July on Thursday. Investors will closely monitor the PMI data as it will indicate whether the hiring trend in the United Kingdom (UK) private sector is still sluggish. Private employers slowed down their hiring trend to offset the rising cost of social security schemes.
Economists expect the Composite PMI to come in at 51.9 against 52.0 in June, suggesting that the overall business activity continued to expand, but at a moderate pace.
On the monetary policy front, market experts are increasingly confident that the Bank of England (BoE) will cut interest rates at its August monetary policy meeting. Brokerage houses including Bank of America (BofA) Global Research, Citigroup, Morgan Stanley, and Goldman Sachs have anticipated a 25 basis points (bps) interest rate reduction in the policy meeting next month.
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 Euro.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.17% | -0.09% | -0.22% | -0.19% | -0.63% | -0.91% | -0.02% | |
| EUR | -0.17% | -0.25% | -0.38% | -0.35% | -0.81% | -1.08% | -0.19% | |
| GBP | 0.09% | 0.25% | -0.08% | -0.10% | -0.56% | -0.82% | 0.12% | |
| JPY | 0.22% | 0.38% | 0.08% | 0.02% | -0.40% | -0.60% | 0.20% | |
| CAD | 0.19% | 0.35% | 0.10% | -0.02% | -0.43% | -0.51% | 0.19% | |
| AUD | 0.63% | 0.81% | 0.56% | 0.40% | 0.43% | -0.26% | 0.67% | |
| NZD | 0.91% | 1.08% | 0.82% | 0.60% | 0.51% | 0.26% | 0.94% | |
| CHF | 0.02% | 0.19% | -0.12% | -0.20% | -0.19% | -0.67% | -0.94% |
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).
Daily digest market movers: Pound Sterling extends winning streak for third trading day against US Dollar
- The Pound Sterling clings to gains near 1.3540 against the US Dollar (USD) during the European trading session on Wednesday. The GBP/USD pair trades firmly as the US Dollar struggles to find ground even as Washington has confirmed a trade deal with Japan, which is one of its key trading partners.
- The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades around 97.45 at the time of writing, close to the two-week low at 97.30 posted on Tuesday.
- US President Donald Trump stated through a post on Truth.Social on Tuesday that a trade agreement with Japan has been confirmed, according to which Washington will charge 15% tariffs on imports from Tokyo. Trump also stated that Japan will open its economy for US companies and will invest $550 billion.
- “Japan will open their Country to Trade including Cars and Trucks, Rice and certain other Agricultural Products, and other things. Japan will pay Reciprocal Tariffs to the United States of 15%,” he wrote. Washington also closed a bilateral deal with the Philippines on Tuesday.
- The trade deal between the US and Japan has come at a time when the Asia-Pacific giant is facing political risks, following an announcement from Japanese Prime Minister Shigeru Ishiba that he will step down by the end of August.
- Going forward, investors will focus on the flash US PMI data for July, which will be published on Thursday. The US PMI report is expected to have grown at a faster pace, driven by expansion in both the manufacturing and services sectors.
- Meanwhile, market expectations for the Federal Reserve (Fed) to reduce interest rates at the September meeting have diminished as experts believe that the impact of tariffs imposed by US President Trump has begun to feed into prices.
- According to the CME FedWatch tool, the probability that the Fed will reduce borrowing rates at the September policy meeting has also reduced to 58.7% from 69.6% seen a month ago.
Technical Analysis: Pound Sterling holds above 1.3500
The Pound Sterling trades close to Tuesday’s high above 1.3500 against the US Dollar on Wednesday. The GBP/USD pair strives to return above the 20-day Exponential Moving Average (EMA) close to 1.3520. The near-term trend of the pair will turn bullish if it manages to do so.
The 14-day Relative Strength Index (RSI) rebounds to near 50.00, indicating indecision among investors and buying interest at lows.
Looking down, the May 12 low of 1.3140 will act as a key support zone. On the upside, the July 1 high around 1.3790 will act as a key barrier.
Economic Indicator
S&P Global Composite PMI
The Composite Purchasing Managers Index (PMI), released on a monthly basis by S&P Global, is a leading indicator gauging private-business activity in UK for both the manufacturing and services sectors. The data is derived from surveys to senior executives. Each response is weighted according to the size of the company and its contribution to total manufacturing or services output accounted for by the sub-sector to which that company belongs. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), industrial production, employment and inflation.The index varies between 0 and 100, with levels of 50.0 signaling no change over the previous month. A reading above 50 indicates that the UK private economy is generally expanding, a bullish sign for the Pound Sterling (GBP). Meanwhile, a reading below 50 signals that activity is generally declining, which is seen as bearish for GBP.
Read more.Next release: Thu Jul 24, 2025 08:30 (Prel)
Frequency: Monthly
Consensus: 51.9
Previous: 52
Source: S&P Global
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.
