Insights 
VT 
The Pound Sterling continues its ascent against the US Dollar, reaching near 1.3330 in the European session. This movement follows softer-than-expected US Producer Price Index data and weaker Retail Sales, which resulted in a decline in the US Dollar Index to around 100.50.
The US Producer Price Index indicates a drop due to a slowdown in sectors like hospitality, with notable impacts from reduced tourist activity. Retail Sales showed a minimal increase of 0.1%, a sharp decline from the previous month’s 1.5%, influenced by anticipated tariff changes. These factors contributed to a decrease in 10-year US Treasury Yields from a high of 4.55% to approximately 4.40%.
Us Federal Reserve Expectations
Despite this, market expectations for steady US Federal Reserve interest rates remain high, as reflected in CME FedWatch tool probabilities. Eyes are now on the upcoming US Consumer Sentiment Index and inflation expectations data.
In the UK, the Pound Sterling retraced against other major currencies after positive GDP data release, except against the US Dollar. This growth suggests the Bank of England might maintain current interest rates. Traders await UK CPI data for further insight into inflation and future rate decisions.
The technical outlook shows the GBP/USD pair above the 20-day Exponential Moving Average with a Relative Strength Index range from 40.00-60.00. The pair faces resistance at 1.3445, with support at the psychological level of 1.3000.
This recent move in the pound pushing close to 1.3330 reflects more than just a moment of dollar weakness. The softer-than-expected Producer Price Index in the US, tied mainly to faltering demand across hospitality and retail-related sectors, was enough to jolt market sentiment. A monthly retail sales figure rising only 0.1% — nowhere near last month’s surprising 1.5% surge — has done little to inspire confidence. The weaker data points suggest consumers are reacting early to foreign trade policy expectations, particularly around tariffs, and that spending patterns may have already started adjusting.
With this shift, we’ve seen the 10-year Treasury yield roll off its recent highs, now hovering closer to 4.40%. More than just a symptom of those economic reports, the yields are also implicitly signalling that strength in the economy may not be enough to justify any further Fed tightening. Still, futures markets haven’t yet priced in rate cuts anytime soon, according to implied probabilities on the CME FedWatch tool. In other words, the option of holding steady remains the dominant view, and it is being priced that way.
Sterling And Gdp Data
Domestically, Sterling’s gains haven’t been across the board. The positive GDP data released recently gave the pound a minor boost against global peers, but its continued run against the dollar seems to hinge more on dollar softness than an outright endorsement of UK growth prospects. That said, an economy showing some forward movement does suggest the Bank of England might not feel the need to react urgently. Current rate levels may last longer than initially expected.
We’re waiting now on CPI data in the UK, which comes with weight, and should indicate whether inflationary pressure is starting to ease or holding steady. Either outcome could potentially shape how markets reprice interest expectations in the weeks ahead. From where we sit, expectations for swift intervention have been dialled back; unless the CPI results deliver an abrupt surprise, rate guidance may stay in its current range.
On the chart, the pair remains relatively stable above its 20-day EMA. The RSI sitting between 40 and 60 doesn’t indicate any sharp imbalances in buying or selling pressure, which typically means short-term price action will need a clearer fundamental catalyst. In terms of ranges we’re watching, immediate resistance can be seen near 1.3445 — with no break above that, any move higher might struggle for momentum. On the other hand, the psychological 1.3000 level offers a clear support floor traders may use to gauge reversal potential or extension to downside.
In derivative spaces, pricing has become more reactive to short-term data shocks. With consumer sentiment and inflation expectations in the US set to print soon, we might see some recalibration in rate expectations — even subtle downward revisions — that could offer temporary tailwinds. Positioning bias should remain balanced unless there’s a notable shift in rate statements or surprise elements in the incoming data. As it stands, directional conviction remains data-sensitive and skewed slightly by recent dollar softness rather than domestic sterling strength.
