- The Pound Sterling underperforms the US Dollar as the market sentiment is risk-averse.
- US President Trump proposes an additional 10% tariffs on China.
- Investors await the US PCE inflation data that will influence the Fed’s policy outlook.
The Pound Sterling (GBP) extends its downside move to near 1.2570 against the US Dollar (USD) in Friday’s North American session. The GBP/USD pair faces pressure as the US Dollar gains further amid a risk-off market mood. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, moves higher to 107.45.
Market participants are cautious as President Donald Trump has announced more levies on China and provided more clarification on the timeline for 25% import duties on Canada and Mexico and reciprocal tariffs.
In his tweet at Truth Social on Thursday, Trump said that 25% tariffs on Canada and Mexico will come into effect on March 4. His tweet confirmed that he is not providing an additional month-long extension to his North American allies as “drugs are still pouring” into the economy. Trump announced an additional 10% levy on China, arguing that drugs entering the US are in the form of fentanyl, which is made in and supplied by China. He added that reciprocal tariffs could come into full force and effect on April 2.
Investors see Trump’s fresh tariff threats as a critical escalation in the global trade war that could lead to an economic slowdown across the globe.
On the domestic front, investors await the US Personal Consumption Expenditure Price Index (PCE) data for January, which will be published at 13:30 GMT. Economists expect the US core PCE inflation – which excludes volatile food and energy prices – to have decelerated to 2.6% year-over-year from 2.8% in December. Month-on-month inflation data is estimated to have grown by 0.3%, faster than the former reading of 0.2%.
Investors will pay close attention to the US core PCE inflation data as it is the Federal Reserve’s (Fed) preferred inflation gauge. These figures will influence market expectations for the central bank’s monetary policy outlook.
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 New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.00% | 0.14% | 0.51% | -0.05% | 0.31% | 0.55% | 0.26% | |
| EUR | -0.01% | 0.13% | 0.53% | -0.05% | 0.30% | 0.54% | 0.25% | |
| GBP | -0.14% | -0.13% | 0.38% | -0.18% | 0.17% | 0.41% | 0.12% | |
| JPY | -0.51% | -0.53% | -0.38% | -0.55% | -0.21% | 0.02% | -0.26% | |
| CAD | 0.05% | 0.05% | 0.18% | 0.55% | 0.34% | 0.59% | 0.30% | |
| AUD | -0.31% | -0.30% | -0.17% | 0.21% | -0.34% | 0.24% | -0.05% | |
| NZD | -0.55% | -0.54% | -0.41% | -0.02% | -0.59% | -0.24% | -0.29% | |
| CHF | -0.26% | -0.25% | -0.12% | 0.26% | -0.30% | 0.05% | 0.29% |
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: Pound Sterling trades cautiously
- The Pound Sterling trades with caution against its major peers on Friday despite investors expecting the Bank of England’s (BoE) monetary easing cycle to be more moderate this year than other central bankers from major economies. Traders have fully priced in two interest rate cuts by the BoE. On the contrary, the European Central Bank (ECB) is expected to cut interest rates thrice and the Federal Reserve (Fed) is anticipated to reduce them by 60 basis points (bps).
- Market participants have been expecting a slower BoE policy easing cycle due to strong wage growth. Average Earnings Excluding bonuses in three months ending December accelerated to 5.9%, the highest level seen since April 2024.
- BoE Deputy Governor Dave Ramsden also said in his speech at Stellenbosch University in South Africa during early European trading hours on Friday that wage growth is “stronger than he expected”. However, Ramsden remained confident that the “core disinflationary process remains intact”. On the global front, he said it is difficult to ascertain whether the impact of United States (US) President Donald Trump’s tariffs will be “inflationary or deflationary” for the economy.
- Meanwhile, the meeting between United Kingdom (UK) Prime Minister Keir Starmer and the US President on Thursday concluded without a deal. However, Trump said there was “a very good chance” of a trade deal “where tariffs wouldn’t be necessary.” Trump added that such a deal could be made “pretty quickly,” BBC reported.
Technical Analysis: Pound Sterling corrects to near 20-day EMA
The Pound Sterling struggles to hold above the 38.2% Fibonacci retracement from the end-September high to the mid-January low downtrend against the US Dollar around 1.2610 on Friday. The 20-day Exponential Moving Average (EMA) near 1.2560 continues to provide support to the pair.
The 14-day Relative Strength Index (RSI) falls back down within the 40.00-60.00 range, suggesting that the bullish momentum has concluded for now. However, the positive bias remains intact.
Looking down, the February 11 low of 1.2333 will act as a key support zone for the pair. On the upside, the 50% Fibonacci retracement at 1.2765 will act as a key resistance zone.