GBP/USD advances toward 1.3605 during Thursday’s Asian session, buoyed by a weakening US Dollar amid expectations of further Federal Reserve rate cuts. Market focus now turns to the upcoming US Initial Jobless Claims data and the UK’s May GDP release for fresh direction.
The Fed’s latest meeting minutes revealed that most policymakers anticipate rate cuts later this year, with inflationary effects from tariffs expected to be “temporary or modest.” Following the release, traders reduced bets on a rate cut in July but continued to price in 50 basis points of easing by year-end, according to Reuters.
Meanwhile, geopolitical and trade-related uncertainty also weighs on the US Dollar. President Trump reiterated that sharply higher tariffs will take effect August 1, though only 10% of the earlier announced April levies have been implemented so far. US Deputy Treasury Secretary Michael Faulkender noted that discussions may continue even if tariffs go into effect, maintaining an atmosphere of uncertainty that could pressure the Greenback.
On the UK front, investors are eyeing the May GDP print. The British economy is expected to grow 0.1% month-on-month, a modest recovery from April’s 0.3% contraction. A weaker-than-expected GDP figure, however, could cap GBP/USD’s upside and renew selling pressure on the pair.
Fed speakers including Alberto Musalem, Christopher Waller, and Mary Daly are also scheduled to speak later today, which may offer further cues on the US monetary policy outlook.
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