The Pound Sterling is holding strong at around 1.3650 against the US Dollar, thanks to a truce between Israel and Iran. Despite Fed Chair Jerome Powell highlighting the need to consider how tariffs affect inflation, the US Dollar is struggling, allowing GBP/USD to rise. The US Dollar Index is hovering around 98.00, its lowest point this week, during the European trading session. President Trump announced the ceasefire and warned against violating it, but support for steady interest rates did not help the Dollar.

BoE Signals and Employment Surveys

BoE Governor Andrew Bailey pointed out a weakening job market in the UK and suggested gradual interest rate cuts. Recent employment surveys show a drop in job vacancies, with Indeed reporting a 5% decline in mid-June. Inflation will likely remain a concern in the upcoming US PCE news, which will significantly affect market trends. The GBP/USD continues to rise as EMA and RSI indicators suggest more strength ahead, with 1.3750 as a potential resistance level. The health of the labour market is crucial for determining currency values. A tight job market and rising wages can impact inflation and monetary policies. This is essential for central banks like the Fed, which aims for employment and price stability. This article highlights key market trends and policy signals shaping the GBP/USD pair. Let’s explore what is boosting the Pound and holding back the Dollar, and what this means for future price movements.

Impact of Geopolitical Tensions and Market Dynamics

Following the announcement of the ceasefire between Israel and Iran, global risk sentiment improved. Generally, when geopolitical tensions ease, demand for safe-haven currencies like the US Dollar decreases. This explains why the Dollar is under pressure. Although the Dollar’s appeal isn’t gone, the urgency to hold it has lessened. Despite Powell’s reminders about evaluating the inflationary effects of tariffs, the Dollar Index remains near its weekly lows. This suggests a gap between worry and action—markets are listening to the Fed but haven’t fully adjusted their pricing yet. Trump’s comments about the ceasefire and his warning about potential violations might have boosted the Dollar if geopolitical concerns had resurged. However, with Treasury yields under pressure and the Fed leaning towards patience on rates, the current dynamics support a stronger Pound rather than a rising Dollar. In the UK, Bailey noted challenges in the job market, such as fewer job postings and less hiring interest. Indeed’s data showing a decline in vacancies reflects this trend. However, this doesn’t mean the BoE plans to cut rates quickly. The focus seems to be on gradual adjustments, which can support Sterling, especially as the Fed likely keeps rates steady longer amid ongoing inflation. The recent movements of GBP/USD show a steady upward trend. Technical indicators like the EMA slope and RSI suggest more upward potential, possibly reaching around 1.3750. It’s important to closely monitor reactions near resistance levels. With minimal Dollar strength to fight against, any positive UK data or even neutral news could keep buyers engaged. From our perspective, job market weaknesses on both sides remain a significant factor. In the US, we expect core PCE inflation to stick around enough to complicate the Fed’s decisions. Since the Fed must manage both inflation and employment, any unexpected rise in jobless claims or slow wage growth could lead to renewed expectations for rate cuts. This divergence will benefit Sterling, especially as UK rates edge ahead. In summary, for those focused on macroeconomic factors, the key takeaway is clear: when two major central banks are cautious, attention shifts to economic data—focusing on who can make moves first or who seems more assured about their next steps. Currently, despite some job market softness, the UK’s rate outlook appears slightly stronger than that of the US, and this small advantage is significant. Create your live VT Markets account and start trading now.

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