Insights 
VT 
The Pound Sterling has weakened to around 1.3540 against the US Dollar, following a high of 1.3600. Optimism for a US-EU trade deal has boosted the US Dollar, with the Dollar Index climbing near 99.35 from a low of 98.70.
The US President mentioned on Truth Social that the EU showed interest in setting meeting dates swiftly. Despite optimism, there remains uncertainty regarding the impact of US trade deals, with Federal Reserve officials concerned about stagflation risks.
Durable Goods Order Impact
The durable goods orders in the US fell by 6.3% after a previous rise of 7.6%. Expectations had been for a decline of 7.9%, reflecting a weaker economic front.
Meanwhile, in the UK, the market anticipates a moderate easing in the Bank of England’s monetary policy. Factors include strong GDP growth, a CPI rise to 3.5% year-on-year, and robust retail sales data.
The Pound Sterling displays strength against most major currencies except the US Dollar. The currency remains above all short-to-long-term EMAs, with a bullish trend indicated by the 14-day RSI near 70.00.
With the Pound giving up ground slightly against the Dollar, hovering at 1.3540 rather than pressing on from the recent 1.3600 mark, we’re keeping an eye on what’s fuelling this push and pull. The rise in the Dollar Index—climbing from 98.70 up to nearly 99.35—suggests that the enthusiasm around a possible trade breakthrough between the US and EU is feeding into broader confidence in the greenback. This isn’t a surprise given how markets often front-run the actual details. That said, there’s always a risk in assuming intent becomes action.
When the President hinted online that talks with the EU could get booked soon, it added energy to the Dollar. But nothing is signed yet. Markets, however, love to move on sentiment just as much as on data. While traders responded positively, some caution is already forming underneath that initial reaction. Fed officials have expressed wariness, particularly about stagflation—rising prices amid slow output—creeping into the picture.
UK Economic Factors
The sharp drop in US durable goods orders, down 6.3%, may not have struck as badly as forecasts of a 7.9% fall, but it’s still a weak print. Coming right after a 7.6% surge, the swing is jarring. That volatility adds more weight to these inflation-growth worries. If these deep contractions start to repeat across sectors, market reactions will start shifting from optimism to defensive positioning.
On the UK side, the Pound has generally held firm on most fronts, except when squared off with the Dollar’s recent gains. We’ve seen this resilience supported by decent economic prints: retail sales up, consumer prices ticking upward, and GDP numbers that still show momentum. It’s that strength which is keeping Sterling above its key short- and long-term moving averages. Technically, the upward trend remains intact, especially with the RSI close to 70.
Now, the Bank of England is anticipated to ease policy—but only moderately. This idea comes not from weakness, but from a balance. Growth is on pace, inflation is picking up slightly, but not soaring out of control. It’s the kind of mix that often leads to trimming interest rates carefully, rather than a sharp shift.
Ahead, volatility may creep back in for Pound-Denominated derivatives as both the UK’s soft monetary bias and the US Dollar’s strength based on sentiment continue elbowing each other out. We’re watching for confirmation—be it concrete trade meetings or domestic data—to determine which tailwind has more staying power.
For now, upward positioning in Sterling, particularly outside of its pairing with the Dollar, may still find backing, but sensitivity will increase as we get closer to policy updates or fiscal decisions. On the US side, if durable goods continue softening and inflation signals stretch further, that push into the Dollar might begin to stall—or at the very least, flatten.
