The Pound Sterling (GBP) revisits the almost 12-week high to near 1.3500 against the US Dollar (USD) during European trading hours on Tuesday. The GBP/USD pair gains as the US Dollar faces intense selling pressure, with traders remaining confident that the Federal Reserve (Fed) will deliver at least two interest rate cuts in 2026.
At the time of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.16% lower to near 98.00. The DXY is not very far from revisiting the 97.87 low posted last week.
According to the CME FedWatch tool, the odds of the Fed reducing interest rates by at least 50 bps in 2026 are 73.8%. However, the Fed’s dot plot published two weeks ago showed that policymakers collectively see the Federal Fund Rate heading to 3.4% by the end of 2026, indicating that there won’t be more than one interest rate cut.
In the press conference after the central bank’s monetary policy decision on December 10, Fed Chair Jerome Powell also stated that the bar for another interest rate cut is very high.
Fed dovish speculation has intensified due to weakening United States (US) job market conditions, and expectations that the impact of tariffs on inflation was a one-off.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.38% | -0.42% | -0.70% | -0.38% | -0.62% | -0.81% | -0.60% | |
| EUR | 0.38% | -0.05% | -0.33% | -0.00% | -0.25% | -0.45% | -0.22% | |
| GBP | 0.42% | 0.05% | -0.29% | 0.04% | -0.20% | -0.39% | -0.17% | |
| JPY | 0.70% | 0.33% | 0.29% | 0.33% | 0.11% | -0.13% | 0.14% | |
| CAD | 0.38% | 0.00% | -0.04% | -0.33% | -0.22% | -0.44% | -0.20% | |
| AUD | 0.62% | 0.25% | 0.20% | -0.11% | 0.22% | -0.19% | 0.03% | |
| NZD | 0.81% | 0.45% | 0.39% | 0.13% | 0.44% | 0.19% | 0.22% | |
| CHF | 0.60% | 0.22% | 0.17% | -0.14% | 0.20% | -0.03% | -0.22% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Daily digest market movers: Few BoE officials warn of upbeats wage growth outlook
- The Pound Sterling trades broadly higher against its major peers amid expectations that the Bank of England (BoE) will follow a gradual monetary easing path in 2026.
- Last week, the BoE reduced interest rates by 25 basis points (bps) to 3.75%, with a narrow majority vote and guided that “rates are on a gradual path downward”. Four of nine members-led Monetary Policy Committee (MPC) dissented on the interest rate cut amid upbeat wage growth outlook, a scenario that could keep inflation persistently higher than the central bank’s target of 2%.
- Though the United Kingdom (UK) headline inflation has consistently cooled down in the last two months on an annualized basis to 3.2% after peaking in the July-September period at 3.8%, it is still significantly higher than the central bank’s target of 2%.
- In the press conference, following the BoE’s interest rate decision, Governor Andrew Bailey assured that inflation could return close to the 2% target by the first half of 2026.
- According to a report from Reuters, traders expect the BoE to deliver at least one 25 bps interest rate cut in the first half of next year.
- In Tuesday’s session, the GBP/USD pair will be influenced by the preliminary US Q3 Gross Domestic Product (GDP) data, which will be published at 13:30 GMT.
- The US economy is expected to have expanded at an annualized pace of 3.2%, slower than 3.8% in the second quarter this year. Signs of moderating US GDP growth would prompt expectations for further interest rate cuts by the Fed in the near term.
Technical Analysis: GBP/USD holds key 20-day EMA
GBP/USD jumps to near 1.3500 on Tuesday. The GBP/USD pair extends its advance above the rising 20-day EMA, which sits at 1.3348 and supports a bullish bias. The 20-day EMA’s upward slope has steepened, underscoring firm demand.
The 14-day Relative Strength Index (RSI) at 68 is near the overbought zone on the daily chart, confirming strong momentum that could stretch further. Measured from the 1.3791 high to the 1.3011 low, the 61.8% Fibonacci retracement at 1.3493 caps the move. A break of this level would open the path toward the 78.6% Fibonacci retracement at 1.3624.
On the contrary, a failure to clear the nearby retracement barrier could prompt a pullback toward the moving average, while sustained strength would preserve the upward tone.
(The technical analysis of this story was written with the help of an AI tool.)