The Pound Sterling: Challenges and Opportunities
The Pound Sterling (GBP) has been facing some challenges recently, but there are also opportunities on the horizon for this currency. Let’s take a closer look at what’s been happening and what we can expect in the near future.
Market Update: Pound Sterling Reacts to UK GDP Data
- The Pound Sterling has experienced some turbulence in the markets, particularly after weak UK GDP data was released on Friday.
- Despite this setback, the British currency is expected to make a significant move on Wednesday when UK inflation data for October is set to be unveiled.
Federal Reserve’s Standpoint on Trump’s Policies
Amidst these developments, the Federal Reserve (Fed) has refrained from making projections on how President Trump’s policies will impact interest rates.
Currently, the US Dollar is holding strong against the Pound Sterling, with investors anticipating a more gradual rate-cut approach from the Fed due to recent inflation trends and positive growth outlook.
The Fed’s Rate-Cut Possibilities
- There is a 62% chance of a 25 basis points (bps) interest rate cut in the December meeting, as per the CME FedWatch tool.
- Analysts are closely monitoring how Trump’s policies could affect inflation and the subsequent impact on interest rates.
Analysts’ Perspective on Trump’s Policies
Quilter Investors analysts believe that Trump’s policies could potentially lead to inflationary pressures and impact the path of interest rates in the future.
However, Fed officials have refrained from providing clear insights on how Trump’s policies will influence monetary policy decisions and the overall economic outlook.
Market Sentiments and Data to Watch
Investors are eagerly awaiting the release of the preliminary S&P Global Purchasing Managers’ Index (PMI) data for November, which is scheduled for Friday.
Analysis: Pound Sterling’s Position and Outlook
The Pound Sterling remains under pressure against the US Dollar, hovering near 1.2600 in Monday’s trading session.
Impact of UK GDP Data
- The recent UK GDP data, showing a contraction of 0.1% in September, has led to concerns about further interest rate cuts by the Bank of England (BoE).
- Analysts predict that disappointing economic data could push the BoE towards focusing on stimulating growth.
UK Economic Uncertainty
- The UK’s economic outlook is clouded by uncertainty, especially in light of the government’s trade relations dilemmas with the EU and the US.
- Recent comments from economic advisors indicate potential shifts in trade dynamics, which could impact the UK’s economic direction.
Upcoming Data Release
Investors are eagerly anticipating the UK Consumer Price Index (CPI) data for October, set to be published on Wednesday. This data is expected to influence rate cut expectations for the BoE’s December meeting.
Technical Analysis: Pound Sterling’s Market Position
The Pound Sterling is striving to maintain a position near 1.2600 against the US Dollar, facing resistance below the 200-day Exponential Moving Average (EMA) at 1.2850.
The 14-day Relative Strength Index (RSI) indicates a strong bearish momentum, with key support at 1.2500 for Pound Sterling bulls.
Overall, the Pound Sterling’s performance in the market is closely tied to economic data releases and global trade dynamics, making it a currency to watch in the coming days.