Trade Deal Announcement Impacts

US President Donald Trump and UK Prime Minister Keir Starmer commended the mutually beneficial trade deal, enhancing market conditions. US unemployment claims dropped slightly, with 228,000 added, lower than expected but bolstering the Fed’s recent decision to maintain rates.

GBP/USD’s upward trend remains uncertain, facing lower highs and lows over recent sessions. If GBP/USD surpasses 1.3400, it may approach the YTD high of 1.3443 and possibly 1.3500, while a decrease below 1.3300 could lead to testing 1.3250, then 1.3200.

A heat map illustrates GBP’s performance against major currencies, with GBP strongest against the Canadian Dollar. Observers should conduct thorough research as markets contain risk and uncertainties, including potential total investment loss.

Following the Bank of England’s choice to reduce interest rates to 4.25%, the Pound edged higher against the dollar, rising to 1.3300—albeit modestly, reflecting a 0.15% increase. The vote behind the policy shift was fractured. Two members preferred to keep policy unchanged, while the remainder favoured varying sizes of cuts. This kind of division within the Monetary Policy Committee isn’t rare, but it tends to create noise around the market reaction, especially in interest-rate sensitive instruments.

Currency Futures and Projections

Currency markets were also buoyed by a bilateral trade agreement between the UK and US. Both leaders—from opposing sides of the Atlantic—praised the agreement, highlighting its targeted benefits for exporters and investors. Such announcements typically encourage optimism for cross-border capital flows, which in turn helps stabilise or even lift the value of sterling if the economic linkages are expected to increase productivity or demand.

Complicating matters further, the latest US weekly jobless claims revealed a figure of 228,000. This was lower than many projections anticipated, aligning quite well with the Federal Reserve’s recent stance to keep interest rates where they are. For those tracking currency futures, that data print might explain some of the reluctance in dollar selling despite a central bank pause. It’s a fine balance: robust US labour data can easily reinforce risk-off positioning, while soft UK monetary policy might weaken sterling down the road—unless offset by confidence-inducing factors like trade.

Create your live VT Markets account and start trading now.