The UK is about to release key economic data, including Gross Domestic Product (GDP) and Industrial Production numbers for August. GDP is expected to increase by 0.1% for the month, while Industrial Production could rise by 0.2%, despite a yearly drop of 0.6%. Recently, GBP/USD gained ground, reaching 1.3400 on Wednesday. This is a recovery from a dip to 1.3290. The UK’s economic data, along with ongoing tensions between the US and China, could impact this trend.

Easing Tensions Help the Pound

The UK Pound is benefiting from easing tensions between China and the US, with GBP/USD at 1.3396. US Treasury Secretary Scott Bessent’s suggestion to reduce tariffs on Chinese goods may lead to future negotiations. Meanwhile, Dogecoin is stabilizing around $0.19 after a 5% drop, thanks to whale accumulation. Additionally, there are various tips available for Forex trading in 2025 that cover the best brokers and strategies for currency trading. We are closely watching the UK’s GDP data for August. The market is expecting a small 0.1% growth, and any change from this could cause significant movement in the Pound. With the UK’s GDP remaining flat for much of 2024, only growing 0.2% in the second quarter and narrowly avoiding recession, even a slight increase would send a positive signal. Currently, GBP/USD is hovering around the 1.3400 mark, which is a key psychological level. We see this as a crucial point in the coming weeks, especially since the pair recently found support at its 200-day moving average. Traders might want to consider using options for a potential breakout, as a stronger-than-expected GDP report could push the pair towards 1.3500.

Impact of the US Government Shutdown

The ongoing US government shutdown complicates matters by limiting the release of important American economic data. This creates an information gap, making the US Dollar more vulnerable to fluctuations driven by international events rather than domestic factors. We experienced a similar situation during the 35-day shutdown in late 2018, which led to unpredictable price movements in major currency pairs. Additionally, signs of improved US-China trade relations could lessen the demand for the US Dollar as a safe-haven asset. Suggestions of pausing tariffs may enhance global risk appetite, benefiting currencies like the Pound Sterling. This trend shows that easing geopolitical tensions often leads to a weaker dollar. In this financially uncertain climate, gold is a vital hedge for portfolios. Its price remains high, building on record levels reached in 2024 as central banks continue to be major buyers. Holding gold-related derivatives is a smart strategy to guard against currency volatility. Even speculative market trends reveal trader sentiment. The accumulation of Dogecoin by large holders indicates some investors are willing to take on more risk. A sustained recovery in such assets could suggest a broader “risk-on” attitude, likely putting downward pressure on the US Dollar. Create your live VT Markets account and start trading now.

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