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GBP/USD steadies after three-day slide as BoE, Fed policy focus shifts
The pound held near 1.3430 as traders weighed expectations that the BoE may keep rates restrictive longer due to sticky inflation pressures and high oil prices.
GBP/USD steadied after three straight days of losses, trading around 1.3430 in Asian hours Tuesday, after having recently risen toward two-month highs near 1.3550. FXStreet attributed the moderation to shifting expectations for monetary policy, as traders weigh the Bank of England against the US Federal Reserve, alongside UK political developments.
The outlet said central bank policy divergence remains the key driver for the exchange rate. Market participants expect rate adjustments on both sides of the Atlantic, with the relative appeal tied to differences in inflation stickiness and labor market strength.
FXStreet noted that upcoming UK labor, inflation, and retail sales data could influence whether the BoE can keep policy restrictive or whether easing should accelerate. Persistently high oil prices were cited as supporting inflation concerns, strengthening expectations that the UK central bank will hold interest rates elevated for longer.
On the US side, FXStreet pointed to a mixed macro backdrop for the dollar, saying softening inflation keeps Fed cuts on the radar and limits sharp greenback strength. The pair is also influenced by safe-haven flows tied to energy-related geopolitical tensions, while steady global risk sentiment provides intermittent support for the pound.
Latest closeGBP/USD 1.348 ▼0.5%