The GBP/USD pair is struggling to make significant progress on Tuesday due to concerns about a potential rate cut by the Bank of England in August and modest strength in the US Dollar. Traders are also cautious ahead of the UK general election on Thursday. The pair is currently trading around the 1.2655-1.2645 range, held in place by the 50-day and 100-day Simple Moving Averages (SMAs). The BoE’s dovish stance in June has increased expectations for a rate cut in August, weighing on the British Pound. Meanwhile, the US Dollar has strengthened, further hindering the GBP/USD pair. The US bond yields rose on Monday, driven by fears of inflation due to aggressive tariffs imposed by the Trump administration.
The uncertainty surrounding the Fed’s rate-cutting cycle in September is also impacting the market. Traders are waiting for more clarity on this before taking any significant positions. The focus will be on Fed Chair Jerome Powell’s speech and the FOMC meeting minutes this week. Additionally, the US Nonfarm Payrolls (NFP) report on Friday will play a crucial role in shaping the near-term dynamics of the USD.
The Pound Sterling is the oldest currency in the world and the official currency of the United Kingdom. It accounts for a significant portion of global foreign exchange transactions and is influenced by the Bank of England’s monetary policy decisions. Economic indicators such as GDP, PMIs, and employment data also play a role in determining the value of the Pound Sterling, along with factors like the Trade Balance.