GBP/USD outlook: the GBP/USD currency pair has been experiencing fluctuations influenced by various economic indicators and geopolitical factors.
The British Pound resumed its upward trajectory early Tuesday morning, buoyed by the latest round of tariffs announced by US President Trump, which targeted base metals such as aluminum and steel. The US dollar weakened, resulting in the GBP/USD pair trading above 1.2400, gaining 0.31%.
Wall Street is poised to open lower as traders adopt a risk-averse stance following Trump's decision to reimpose a 25% tariff on steel and aluminum imports, effective March 12. Meanwhile, a light economic calendar, primarily influenced by Federal Reserve speakers, has traders awaiting Fed Chair Jerome Powell's upcoming testimony before Congress.
Cleveland Fed President Beth Hammack remarked that she supports holding interest rates steady for the time being, allowing the Fed to evaluate the economy. She noted that the current policy is "modestly restrictive" and expressed uncertainty about whether inflation will continue to trend toward the Fed's 2% target.
On the other side of the Atlantic, Bank of England (BoE) member Catherine Mann recently voted for a 50 basis points (bps) interest rate cut, aligning with fellow member Swati Dhingra. Known as a hawkish figure within the BoE, Mann emphasized the need for restrictive monetary policy, suggesting that the long-term neutral rate could lie at the higher end of the 3.0% - 3.5% range based on the BoE's latest investor survey. She stated, “I choose 50 basis points now, along with continued restrictiveness in the future and a higher long-term Bank Rate to 'cut through the noise.’”
GBP/USD forecast: Given the current fundamental landscape, GBP/USD has extended its gains following the formation of an ‘inverted hammer’ pattern after a downtrend. However, downward pressure remains unless buyers can push past the 50-day Simple Moving Average (SMA) at 1.2479, which could open the door to the latest cycle high at 1.2549, reached on February 5.
If this occurs, the GBP/USD could further its rally and challenge the 100-day SMA at 1.2718. Conversely, if the pair falls below 1.2400, sellers could push the exchange rate down toward the February 3 daily low of 1.2248.
The British Pound is experiencing fluctuations, influenced by both domestic and international factors. Traders should remain vigilant as they monitor economic developments and central bank policies that could impact future movements.
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