GBP/USD catches some lift on hopes for a US-UK trade deal
GBP/USD rose on Tuesday, climbing four-tenths of one percent on the day and testing the 1.3400 handle on headlines of a possible US-UK trade deal that would see the UK avoid the brunt of trade tariffs being actively pursued by the Trump administration.
The Federal Reserve’s (Fed) upcoming rate call due on Wednesday still hangs over markets as the key market event of the week. Despite markets broadly anticipating another hold on Fed rates, investors will be taking a close look at policymaker comments, specifically Fed Chair Jerome Powell’s statement, for any signs that the Fed might be pivoting toward a rate-cutting cycle sooner rather than later.
Fed, Boe double header due this week
The Fed has come under pressure on multiple fronts to drop interest rates recently: market participants are always on the hunt for cheaper financing options, and the Trump administration has been incredibly vocal and adamant that the Fed’s job should be to lower interest rates in order to make US debt servicing cheaper. This runs largely opposite the Fed’s dual mandates of supporting full employment and keeping price volatility in check, however these key aspects of the Fed’s mandate are largely lost on US President Donald Trump.
The Bank of England (BoE) will be following up Wednesday’s Fed action with its own rate call on Thursday. Unlike the Fed, the BoE is broadly expected to deliver another quarter-point rate trim, with the BoE’s Monetary Policy Committee (MPC) expected to vote nine-to-one in favor of delivering its fourth rate cut since August of last year.
Source: Fxstreet
