Insights 
VT 
On Friday, the Pound Sterling rose by 0.41% following the announcement of a US-UK trade deal, though its gains were limited by a rate cut from the Bank of England. The GBP/USD pair traded near 1.33 after bouncing off a low of 1.3211.
The trade agreement maintains a 10% tariff on British exports but opens markets for both countries. The Bank of England’s decision to cut rates by 25 basis points saw a mixed vote, with some members favouring a deeper cut.
Interest Rate Anticipations
Interest rate anticipations indicate reduced chances of a cut in June, with a 50% chance seen in July. The US Dollar Index decreased by 0.37%, aiding Sterling’s position.
In the US economic sphere, Fed officials provided updates on the labour market and monetary policy. Predictions include a return of inflation to 2% and a slowdown in growth.
GBP/USD is inclined to rise but sits near its weekly opening price, hinting at balance between buyers and sellers. With momentum appearing bullish, reclaiming 1.3400 could open paths to testing yearly highs.
Should GBP/USD dip below 1.3300, potential supports are 1.3250 and the day’s low at 1.3211. Sterling showed the most strength this week against the Canadian Dollar.
The recent move higher in the Pound, triggered largely by optimism surrounding the newly signed US-UK trade agreement, caught some off guard but didn’t manage to extend very far. Although the announcement gave Sterling a bump, it couldn’t fully escape the weight of the Bank of England’s latest monetary decision. The 0.41% rise in GBP/USD was impressive at first glance, particularly with a bounce off 1.3211, yet the presence of a rate cut capped further upside. Bailey’s team voted to lower rates by 25 basis points, though they were not entirely united — showing sentiment is far from settled at the central bank.
Markets had already priced in some easing, but the hesitation within the BoE, especially with a few policymakers pushing for an even steeper cut, gives us a sense that internal debates will shape forward guidance more than external headlines. With that in mind, any expectations of further easing in June are fading fast, now considered less likely. Eyes are instead shifting to July, which has about an even split in expectations — that kind of split usually doesn’t hold long.
Cooling Pressure on the Dollar
The US, meanwhile, saw cooling pressure on the Dollar, with the DXY falling by 0.37%. This helped Sterling hold ground despite the headwind from the BoE. Fed speakers were out discussing their outlooks — the shared tone pointed to slower growth and a return towards the 2% inflation target, something that, when combined with job market stabilisation, hints at a wait-and-see stance from Powell’s side.
From a technical perspective, GBP/USD is treading water near its weekly open, not quite tipping bullish nor bearish, though momentum appears to be quietly building. If pressure pushes it above 1.3400, there’s a path to challenge the highs seen earlier in the year. That region has served as a barrier in months past, and a break above would invite follow-through buying.
But there’s also a chance of a slip — a drop under 1.3300 would expose support levels back at 1.3250, and possibly that low at 1.3211 we bounced from on Friday. That price held once, but there’s no guarantee it will again, particularly if US macro data begins to surpass expectations or if the BoE shows further discomfort with its current rate path.
Watching correlations earlier this week, we saw Sterling outperform the Canadian Dollar — not a small feat given how closely the two tend to track commodity-linked risk sentiment. That likely owes to wider rate divergence expectations between the two economies, a point well worth tracking over the coming sessions.
As positioning shifts in response to both UK and US policy signals, there may be better clarity in directional trades by the time the next inflation print lands. Until then, we would remain attentive to intraday swings around 1.3300 and flexible to momentum shifts — trend conviction is still shallow, and ranges may tighten ahead of the next set of rate clues from Threadneedle Street.
