The British Pound (GBP) opened Thursday with a modest rally against the U.S. Dollar (USD) after the Bank of England (BoE) delivered a widely expected 25 basis point interest rate cut. However, Sterling’s early gains were short-lived, as attention quickly shifted to U.S. trade developments, which buoyed the greenback and reversed the GBP/USD pair’s intraday momentum.
Market optimism surrounding potential U.S. trade agreements overshadowed the BoE decision. The Trump administration’s announcement of an impending trade deal with the United Kingdom offered the USD fresh support. The deal aims to avert the reimposition of steep “reciprocal” tariffs on UK imports, scheduled to take effect on July 9. These tariffs had initially been delayed under President Trump’s so-called “Liberation Day” tariff relief. Despite this progress, a blanket 10% tariff on all UK imports into the U.S. remains on the table, threatening to dampen risk sentiment in the coming weeks.
Notably, some products—such as refined ethanol—have been fully exempted from tariffs. However, trade data shows the U.S. has not imported refined ethanol from the UK in over 15 years, making the exemption largely symbolic and offering little practical relief to broader trade flows.
GBP/USD Price Forecast:
The GBP/USD pair has extended its pullback for a second consecutive session, dropping another 0.33% to trade below the 1.3250 mark. The pair’s recent failure to hold above the psychological 1.3300 level has opened the door to further downside.
Technically, GBP/USD now appears on track to test the 50-day Exponential Moving Average (EMA), currently situated near 1.3075. A decisive break below this level could confirm a bearish shift in the near-term outlook and potentially pave the way for deeper losses toward 1.3000.
Outlook:
While the BoE rate cut was priced in, Sterling’s weakness stems from shifting global risk sentiment and renewed USD strength. Going forward, GBP/USD traders will closely monitor developments in U.S.-UK trade negotiations and upcoming macroeconomic data for directional cues.
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