- The Pound Sterling is under pressure on Tuesday as BoE official Catherine Mann is concerned over weak demand and guides cracks in the labor market.
- US President Trump imposes 25% tariffs on steel and aluminum and is poised to announce reciprocal tariffs.
- Investors await BoE Bailey and Fed Powell’s speech on Tuesday.
The Pound Sterling (GBP) rebounds against its major peers in European trading hours on Tuesday ahead of Bank of England (BoE) Governor Andrew Bailey’s speech at the University of Chicago Booth School of Business in London at 12:15 GMT. Investors will pay close attention to Bailey’s guidance on interest rates.
Last week, the BoE reduced its key borrowing rates by 25 bps to 4.5%, as expected, with a 9-0 vote split favoring a rate cut. Seven MPC members voted for a 25 bps interest rate reduction. Surprisingly, Catherine Mann joined MPC member Swati Dhingra and favored a larger-than-usual rate cut. Andrew Bailey guided a “gradual and cautious” rate cut approach.
Earlier in the day, BoE Monetary Policy Committee (MPC) member Catherine Mann deliverd a dovish commentary in an interview with the Financial Times (FT). Investors were keenly awaiting Catherine Mann’s interview to know the reasons that forced her to favor a bigger interest rate reduction in the previous week’s policy decision after being an outspoken hawk for a long period.
Mann said that she changed her mind about the policy because “demand conditions are quite a bit weaker than has been the case”. So, a 50 basis points (bps) rate cut call from her was a way to communicate with traders about “what we think are the appropriate financial conditions for the United Kingdom (UK) economy”.
When asked about her outlook on inflation and labor demand, Mann was confident that inflation would remain consistent with the BoE’s target of 2% later this year and saw a “non-linear” fall in employment.
British Pound PRICE Today
The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.11% | -0.06% | 0.00% | 0.19% | -0.05% | -0.12% | 0.08% | |
| EUR | 0.11% | 0.03% | 0.08% | 0.31% | 0.06% | -0.03% | 0.20% | |
| GBP | 0.06% | -0.03% | 0.06% | 0.28% | 0.01% | -0.05% | 0.12% | |
| JPY | 0.00% | -0.08% | -0.06% | 0.21% | -0.04% | -0.12% | 0.06% | |
| CAD | -0.19% | -0.31% | -0.28% | -0.21% | -0.24% | -0.32% | -0.15% | |
| AUD | 0.05% | -0.06% | -0.01% | 0.04% | 0.24% | -0.07% | 0.09% | |
| NZD | 0.12% | 0.03% | 0.05% | 0.12% | 0.32% | 0.07% | 0.17% | |
| CHF | -0.08% | -0.20% | -0.12% | -0.06% | 0.15% | -0.09% | -0.17% |
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 British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
Daily digest market movers: Pound Sterling rebounds against USD ahead of Fed Powell’s testimony
- The Pound Sterling bounces back against the US Dollar (USD) around 1.2350 in Tuesday’s European session. The GBP/USD pair rebounds as the US Dollar trades subduedly. However, the outlook of the US Dollar remains firm on the assumption that the impact of 25% tariffs on steel and aluminum imports by all nations into the United States (US) will be inflationary.
- On Monday, US President Donald Trump signed executive orders to impose 25% tariffs on all imports of steel and aluminum and confirmed that no country would be exempt from the duties, which will come into effect from March 4. Trump added that he will also announce reciprocal tariffs in the coming days.
- Market participants worry that US importers will bear the impact of higher metal prices. This scenario would be inflationary for the economy, as business owners would pass on the impact of higher input prices to end consumers. This would force Federal Reserve (Fed) officials to wait more months before resuming the policy-easing cycle, which the central bank paused in January.
- For meaningful cues on the interest rate outlook, investors will focus on Fed Chair Jerome Powell’s testimony before Congress at 15:00 GMT. Powell is also scheduled to testify before Congress on Wednesday.
- In the January policy meeting, Jerome Powell said that monetary policy adjustments would become appropriate only when the Fed will see “real progress in inflation or at least some weakness in the labor market”.
- This week, investors will also focus on the US Consumer Price Index (CPI) data for January, which will be released on Wednesday.
Technical Analysis: Pound Sterling remains below 50-day EMA
The Pound Sterling extends its losing streak for the fourth trading day against the US Dollar and posts a fresh weekly low near 1.2350 on Tuesday. The GBP/USD pair resumed its downside journey after recovering to near the 50-day Exponential Moving Average (EMA) around 1.2484.
The 14-day Relative Strength Index (RSI) oscillates inside the 40.00-60.00 range, suggesting a sideways trend.
Looking down, the January 13 low of 1.2100 and the October 2023 low of 1.2050 will act as key support zones for the pair. On the upside, the December 30 high of 1.2607 will act as key resistance.
Economic Indicator
BoE’s Governor Bailey speech
Andrew Bailey is the Bank of England’s Governor. He took office on March 16th, 2020, at the end of Mark Carney’s term. Bailey was serving as the Chief Executive of the Financial Conduct Authority before being designated. This British central banker was also the Deputy Governor of the Bank of England from April 2013 to July 2016 and the Chief Cashier of the Bank of England from January 2004 until April 2011.
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Next release: Tue Feb 11, 2025 12:15
Frequency: Irregular
Consensus: –
Previous: –
Source: Bank of England
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