The Pound Sterling has hit a fresh over four-month low near 1.2630 against the US Dollar amid optimism over the US economic outlook. This comes as President-elect Donald Trump and the Republican Party are set to control both the US Senate and the House of Representatives, allowing Trump to implement his protectionist and expansionary policies without much hindrance. Market participants believe that this could lead to a high-inflation environment, limiting the potential for aggressive interest rate cuts by the Federal Reserve.
Investors are eagerly awaiting a speech by Fed Chair Jerome Powell, as well as fresh economic data, to gauge the possibility of a rate cut in December. Meanwhile, the Pound Sterling remains mixed against other major currencies ahead of a speech by Bank of England Governor Andrew Bailey. Bailey is expected to provide insights on the BoE’s decision regarding interest rates in December and the impact of Trump’s policies on the UK economy.
Technical analysis shows that the Pound Sterling faces strong support at the 1.2600 level, while resistance lies near the 200-day Exponential Moving Average. The currency has been on a downward trend for the past five trading days, with the Relative Strength Index indicating a bearish momentum. Market observers will be closely monitoring the Pound Sterling’s performance in the coming days amid uncertainty over interest rate decisions by both the Federal Reserve and the Bank of England.
Overall, the Pound Sterling’s recent decline against the US Dollar can be attributed to optimism over the US economic outlook under the incoming Trump administration. The prospect of higher import tariffs and lower taxes has raised inflation expectations, reducing the likelihood of aggressive interest rate cuts by the Federal Reserve. Investors are eagerly awaiting speeches by Fed Chair Jerome Powell and Bank of England Governor Andrew Bailey for further insights on interest rate decisions in the coming months. Technical analysis suggests that the Pound Sterling faces strong support at the 1.2600 level, with resistance near the 200-day Exponential Moving Average.
