The Pound Sterling is currently struggling to surpass the 1.2600 mark against the US Dollar, trading at 1.2607. It is anticipated to achieve its first monthly gain since September 2024.
In the North American session, GBP remains stable near 1.2600, as the US Dollar retracts gains due to forecasts of a slowdown in the core Personal Consumption Expenditure (PCE) index. The USD Index maintains a value around 107.40.
The GBP/USD pair dipped to approximately 1.2580 earlier, influenced by tariff uncertainties from the US administration. Upcoming US PCE data is expected to be a key focus later today.
James has highlighted the struggle of Sterling to break past 1.2600, but signs suggest it could post its first monthly advance since last September. While it holds steady in the North American session, some support comes from the US Dollar pulling back. That retreat seems linked to forecasts of a slowdown in the core PCE index. Meanwhile, the broader Dollar gauge remains elevated around 107.40.
Earlier in the session, the Pound fell to roughly 1.2580. This drop happened as traders reacted to uncertainty around potential tariffs from Washington. However, eyes are now firmly set on the upcoming core PCE index report.
Daniel draws attention to that data release, and for good reason—it’s the Federal Reserve’s preferred inflation gauge. If figures come in lower than expected, markets may interpret it as a sign that rate pressures could ease, which might weaken the Dollar further. That, in turn, could provide more fuel for Sterling to push back towards recent highs. Conversely, if the data surprises to the upside, the arguments for keeping US interest rates higher for longer would gain credibility, likely putting renewed pressure on the Pound.
Beyond today’s numbers, we should watch for any indication of a shift in the Bank of England’s stance. Emma has already pointed out that Sterling’s outlook depends not just on the Fed, but also on expectations around the BoE’s rate trajectory. Any signals that policymakers in London are growing more cautious about inflation cooling too quickly could add strength to Sterling.
Meanwhile, traders should remain alert to ongoing discussions around tariffs. Whether or not Washington moves forward with new trade measures will be key, as uncertainty in that domain could continue to inject volatility into markets. Short-term movements in the pair are likely to reflect the tension between US rate expectations and any new trade policy shifts.
For now, the focus remains on the coming PCE inflation data. If traders see confirmation of softer price pressures, we could find Sterling attempting further upside moves. However, if that data suggests inflation is still sticky, expect buying pressure on the Dollar to pick up pace again.
