The Pound Sterling (GBP) fell against the US Dollar (USD) as UK inflation decreased to 2.8% in February, down from 3% in January. The core Consumer Price Index (CPI) also declined, prompting speculation about potential interest rate cuts by the Bank of England (BoE).
The Spring Budget presented by Chancellor Rachel Reeves included £7 billion in spending cuts, with substantial reductions to welfare and current spending. The Office for Budget Responsibility forecasted UK economic growth at 1% for 2025, a decrease from the previous estimate of 2%.
Durable Goods Orders Rise In US
In the US, durable goods orders rose 0.9% month-on-month in February, surpassing expectations. Minneapolis Fed President Neel Kashkari remarked on the progress made in reducing inflation but acknowledged further action would be necessary.
GBP/USD currently trades at 1.2895, with technical indicators suggesting potential moves towards 1.2800 or 1.2700, depending on market direction. Percentage changes reflect that the British Pound has performed relatively strongly against the Japanese Yen this week.
A drop in UK inflation to 2.8% last month from 3% the month before has led to speculation that the Bank of England could lower interest rates in the near future. Core inflation also moved down, reinforcing expectations that policymakers may shift towards easing monetary policy. Monetary decisions tend to have a direct impact on currency markets, and this possibility is keeping traders on alert.
The Spring Budget delivered by Reeves included £7 billion in spending reductions, affecting both welfare and general expenditure. Although this brings the government a step closer to balancing public finances, the lower economic growth forecast from the Office for Budget Responsibility—adjusted from 2% to 1% for next year—raises concerns that weaker expansion could limit fiscal flexibility.
On the other side of the Atlantic, recent economic data showed that orders for durable goods climbed by 0.9% in February, beating expectations. Kashkari acknowledged that inflation progress has been made, though he suggested more effort may still be required. If US policymakers take a more cautious approach before adjusting interest rates, this could influence demand for the dollar in the weeks ahead.
British Pound And Market Trends
The GBP/USD exchange rate now stands at 1.2895, with technical analysis pointing towards possible shifts lower, potentially reaching 1.2800 or even 1.2700 depending on upcoming market movements. Meanwhile, the British currency has shown relative strength against the Japanese Yen in recent days. Traders involved in derivatives should remain attentive to upcoming statements from central banks and economic reports that could move these trends further.
