The GBP/USD currency pair maintained its upward trajectory, trading around 1.3280 during the Asian session on Friday, buoyed by a softening US Dollar (USD). Market sentiment remains sensitive to growing concerns about the economic fallout from US tariffs. Traders are closely watching US trade negotiations, although market activity is expected to remain subdued due to the observance of Good Friday.
The USD found some support following comments from Federal Reserve Chair Jerome Powell, who warned that persistent inflation, coupled with a sluggish economy, could challenge the Federal Reserve’s dual mandate, raising concerns about potential stagflation. According to the CME FedWatch Tool, markets are anticipating roughly 86 basis points of rate cuts by the end of 2025, with the first reduction projected for July.
In labor market news, the US Department of Labor revealed that Initial Jobless Claims fell to 215,000 for the week ending April 12, surpassing expectations and dropping from a revised 224,000 the previous week. However, Continuing Claims increased by 41,000 to 1.885 million for the week ending April 5.
In the UK, Chancellor of the Exchequer Rachel Reeves is set to meet with US officials next week to continue advancing trade deal discussions, with reports suggesting that a deal could be finalized within three weeks. UK economic data reflects resilience, with strong wage growth and improving GDP figures. However, easing inflation has fueled speculation of potential rate cuts from the Bank of England (BoE). March CPI slowed to 2.6% year-over-year, below expectations, while monthly inflation moderated to 0.3%. Core services inflation, a key BoE indicator, dropped to 4.7%.
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