Pound Sterling gains on US-UK trade deal, BoE’s gradual easing guidance

• The Sterling book becomes positive against the US dollar around 1.3,250 before the American-Chinese meeting this weekend.
• Investors applauded the US American trade agreement announced on Thursday.
• The BOE reduced interest rates from 25 BPS to 4.25%, while the Fed left them unchanged in the range of 4.25% to 4.50% this week.

Friday, The Pound Sterling (GBP) surpasses its peers, except for the Japanese Yen (JPY). British currency capitalizes on the announcement of the trade agreement between the UNITED STATES (United States) and the United Kingdom (United Kingdom) the day before, and the interest rate decision of the Bank of England (BOE), with a division of 7-2 vote.

The BOE lowered interest rates from 25 basic points (BPS) to 4.25%, as expected, marking the drop in the fourth rate in the current monetary expansion cycle. Catherine Mann, member of the BOE monetary policy committee, Catherine Mann and the chief economist Huw Pill favored the fact of leaving interest rates unchanged, while investors expected that all MPC members vote for a reduction in interest rates. Of seven MPC members who supported the softening of monetary policy, two officials, Swati Dhingra and Alan Taylor, supported a greater reduction of 50 BPS.

Other factors for the announcement of monetary policy, which have obtained offers for the pound sterling, were the retention of a “progressive and prudent” policy approach and a forecast of the gross domestic product (GDP) revised upwards for the current year. The BOE sees the economy develop at a faster pace of 1%, against 0.75% scheduled for the February meeting.

However, the governor of BOE Andrew Bailey warned against rising risks for the economy due to the world trade war. “”The global economic environment is likely to continue to be difficult and less predictable than in the past,“Bailey said during European negotiation hours.

Daily Digest Market Movers: Pound Sterling becomes positive against the US dollar

• The pound sterling recovers intrajournual losses and increases to more than 1.3270 against the US dollar (USD) in European negotiation hours on Friday. THE GBP / USD pair Attracts offers because the US dollar corrects slightly after a strong advantage on Thursday.
• The US dollar index (DXY), which follows the value of the greenback compared to six main currencies, is recovered at almost 100.40, against a summit of almost a month of 100.85 displayed Thursday. The USD index has increased sharply the day before after the announcement of a trade agreement between the United States and the United Kingdom.
• A strong upward decision in the US dollar reflected that participants in the financial market have applauded the first trade agreement by the White House under the leadership of US President Donald Trump since the “Liberation Day”. This has strengthened the confidence of investors that the prices announced by Trump are more a “tactical” to have a dominant position while negotiating trade agreements with other nations, and have attenuated fears of higher import rights that derail the economy.
• However, the materialist impact of the US-UK trade agreement is limited because Washington already enjoys a trade surplus against London. Consequently, the real boost for the confidence of investors in the American economy would increase if the trade war between Washington and China moved after their meeting in Switzerland on Saturday.
• The secretary in the United States of the Treasury, Scott Bessent and the commercial representative, Jamieson Greer, confirmed that they would meet their Chinese counterparts this weekend, aimed at defusing the trade war.
• Before Sino-Us trade discussions, the US Secretary of Trade Howard Lutnick also expressed his confidence in improving commercial relations between the two largest powers in the world. “Degaspaading with China is the goal of Bessent in talks,” said Libnick in an interview with CNBC on Thursday evening.
• On Thursday, a New York Post report showed that US President Trump could reduce prices on China up to 50% and 54% next week. However, the White House spokesperson Kush Desai has not confirmed.
• Meanwhile, the US dollar also outlined the announcement of the monetary policy of the Federal Reserve (Fed) on Wednesday, in which the central bank left stable interest rates in a range of 4.25% to 4.50% for the third consecutive time. The Fed guided that the adjustments in monetary policy would only be appropriate if the officials are clarifying how the new economic policies of the American president Trump will shape the economic prospects.
• The president of the Fed, Jerome Powell, warned the risk of stagflation in the face of the prices announced by Trump. “Until now, the prices announced have been considerably higher than expected, and we will see higher inflation, and lower employment if a significant increase in the prices announced is supported,” said Powell.

Technical analysis: Pound Sterling falls below the EMA of 50 periods

The pound sterling attracts offers nearly three weeks of 1.3210 against the US dollar on Friday. However, the prospects of the pair has become uncertain due to the formation of a model of head and shoulder graphic (H&S) on the time of 4 hours after revising the three -year summit around 1,3450. A ventilation of the H&S graphic motif leads to a downward reversal, and its training near critical resistance increases its credibility.

The cable is negotiated below the exponential mobile average of 50 periods (EMA), which is around 1.3305, which suggests that the short -term trend is down.

The relative resistance index of 14 periods (RSI) seems vulnerable around 40.00. If a downward momentum triggers if the RSI falls below level 40.00.

Uplining, the 1.3445 three -year summit will be a key obstacle for the pair. Looking down, the psychological level of 1.3000 will act as a field of major support.