Insights 
VT 
The Pound Sterling rose against the US Dollar, reaching over 1.3600, with a gain of more than 0.65%, amid a failed ceasefire between Israel and Iran. President Trump had cautioned against the conflict, yet risk appetite remains strong despite this Middle East situation.
Federal Reserve Chair Jerome Powell indicated rate cuts could be delayed as the central bank evaluates tariff impacts. He noted tariffs this year may increase prices and affect economic activity, with impacts possibly short-lived or lasting.
Federal Reserve Commentary
Some Federal Reserve members previously supported a rate cut, but recent comments suggest rate cuts may be postponed. Cleveland Fed Beth Hammack mentioned rate cuts could be delayed, echoing views by Atlanta Fed President Raphael Bostic.
In the US, April housing data showed a 2.7% rise in home prices from a year ago. In the UK, the CBI Industrial Trends Survey indicated a slight improvement, with manufacturing output volumes expected to decline less sharply.
Governor Dave Ramsden mentioned labour market weakness affecting his decision at the Bank of England meeting. Meanwhile, sterling was stronger against major currencies, notably a 1.53% increase against the US Dollar.
Technical analysis indicates upward momentum for GBP/USD, though geopolitical risks could affect trends. The first support level is observed at 1.3550.
Market Dynamics and Economic Indicators
The recent move higher in Sterling, pulling GBP/USD beyond 1.3600 with a 0.65% uptick, reflects how broader market dynamics are favouring the British currency — at least temporarily. There was some tailwind from a weaker Dollar, though this came against the backdrop of escalated tensions in the Middle East, where attempts at brokering a ceasefire appear to have faltered. Despite this, appetite for risk remains relatively firm across markets. Encouragement for Sterling wasn’t driven by headlines out of Westminster or Threadneedle Street alone, but rather a combination of relative resilience and sturdier data points.
Across the Atlantic, Powell surprised few by suggesting the Federal Reserve won’t be hurrying into rate cuts just yet. His concern lies in the inflationary consequences of tariffs introduced this year, suggesting they could push prices up without a guarantee of a quick economic snapback. Recent voices that once looked open to easing — including Hammack and Bostic — have shifted their tone. Their wariness about trimming rates appears to echo a broader discomfort within the Fed about loosening policy in the current environment. Instead of rushing into accommodative moves, there’s a clear desire to let data guide timing more cautiously.
We can’t ignore some of the softer economic indicators emerging from the States either. House prices rose 2.7% year-on-year in April — not a runaway figure, but certainly supports the idea that the housing market isn’t cooling dramatically just yet. Pair that with industrial indicators in the UK that suggest contraction is slowing, and it’s easy to see why Sterling might be on firmer footing compared to the Dollar in the near term.
Ramsden’s remarks, focused on observed labour market softness, suggest that he remains hesitant to support near-term rate hikes at the Bank of England. That serves as a mild counterweight to optimism around British manufacturing stabilising somewhat. Taken together, these remarks reflect a cautious tone, less about making abrupt moves and more about calibrating for persistence in inflation alongside slow-moving economic growth.
For those of us closely monitoring short-term price behaviour, GBP/USD still trades above technical support — currently around 1.3550 — which remains a key reference point in the event of a pullback. The currency pair seems to have some momentum behind it, although further directional clarity may hinge on whether geopolitical issues flare up again or dissipate. With volatility sitting just below levels that trigger broader re-pricing, we should continue to monitor real yields and Fed commentary for shifts in positioning.
Derivative traders should take note of this short- to medium-term stability in Sterling, as pricing in rate futures has shifted recently. Probability for early easing in the US has declined, reflected in options positioning and adjusted for risk premium in US assets. Meanwhile, expectations for the UK’s rate path continue to drift, nudged by only mildly supportive economic data and mixed internal signals from policymakers.
So, for the coming sessions, our attention turns to incoming UK wage data and US inflation readings — both capable of setting the tone for moves at the front-end. That in turn may shape pricing in swaps and futures, especially where policy divergence narratives gain strength or weaken.
