BUZZ-COMMENT-Sterling support by 1.24 tested as traders await Trump tariffs, BoE
Today's U.S. data dump had little impact on sterling, though persistent U.S. inflation expectations, uncertain U.S. trade policy and an upcoming Bank of England interest rate cut seem to conspire against GBP/USD in the near-term.
Today's mostly in-court U.S. data aligns with comments by Federal Reserve Chair Jerome Powell after Wednesday's Fed rate hold, asserting no hurry to continue cutting rates.
Rate differentials are hardly the only problem for sterling, or other developed market currencies. The overhang of President Donald Trump's tariff policies is also putting downside pressure on the pound.
Adding to the mix is the expected BoE rate cut on Feb. 6. Traders will be keen to hear guidance from the BoE regarding the speed and depth of future cuts. Though considering falling UK services inflation and softening labor data, the risks are for a more dovish BoE.
The conditions suggest a top for GBP/USD has likely been reached. For now, support at the 30-day moving average by 1.24 has loosely held, though given the trade and monetary policy realities, that support is likely to give way, opening a path to mid-January lows by 1.21.
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