The GBP/USD pair extends losses to trade near 1.2580 during early European hours on Friday, pressured by renewed trade uncertainty following US President Donald Trump’s remarks on potential tariffs against the United Kingdom. The Pound Sterling (GBP) struggles against the US Dollar (USD) ahead of the highly anticipated US Personal Consumption Expenditures (PCE) Price Index release later in the day.
President Trump met with UK Prime Minister Keir Starmer late Thursday, warning that tariffs could be imposed on UK exports unless the two countries finalize a trade deal under more favorable terms within an unspecified timeframe. The remarks have heightened investor caution, with markets closely monitoring any further developments that could escalate trade tensions between the US and UK.
Meanwhile, data from the US Bureau of Economic Analysis (BEA) showed that the US economy expanded at an annual rate of 2.3% in the fourth quarter of 2024, aligning with market expectations and the previous estimate. The steady GDP growth, coupled with ongoing tariff concerns, bolstered the safe-haven appeal of the US Dollar.
Market Focus on US PCE Inflation Data
Investors are turning their attention to the US PCE Price Index—the Federal Reserve’s preferred inflation gauge—due later on Friday. The outcome of this report could significantly impact the Fed’s interest rate outlook. According to the CME FedWatch Tool, markets are currently pricing in a 68% probability of the Fed cutting interest rates in June, following a pause in both the March and May meetings.
Technical Outlook
The GBP/USD pair remains under pressure, trading below key moving averages on the daily chart. Immediate support is seen at 1.2550, with a break below this level potentially opening the door for further downside toward 1.2500. On the upside, initial resistance is at 1.2620, followed by the 1.2700 psychological mark.
With geopolitical uncertainties and inflation data in focus, the pair’s near-term trajectory will likely depend on the broader risk sentiment and signals from the Federal Reserve’s future monetary policy stance.
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