GBP/USD rallies as “Sell America” trade returns on Fed independence fears
- GBP/USD jumps as threats to Fed independence spark renewed “Sell America” flows into G10 currencies.
- Dollar weakens sharply, with DXY sliding as markets react to Powell’s remarks on political pressure.
- Focus shifts to UK GDP and jobs data for clues on the Bank of England’s policy outlook.
The British Pound stages a comeback on Monday as traders grow risk avers following threats for the US Federal Reserve independence. A scarce economic docket in the UK, shift the focus to geopolitical developments and the Dollar, which continued to soften as the “Sell America” trade is back into play. The GBP/USD trades at 1.3473, up 0.55%.
Sterling rebounds as political pressure on the Federal Reserve dents the Dollar
Over the weekend, the Fed Chair Jerome Powell released a statement and commented in a video that “the US central bank had been served grand jury subpoenas from the Justice Department threatening a criminal indictment.” He said, the move “should be seen in the broader context of the administration’s threats and ongoing pressure,” and added that “The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President.”
Consequently, the Greenback plunged, as depicted by the US Dollar Index (DXY). The DXY which measures the performance of the buck’s value versus six currencies, is down 0.35% at 98.79.
Although US President Donald Trump denied any knowledge of the investigation into the central bank, he constantly has been bullying the Fed Chair Powell, due to the lack of reducing interest rates as Trump expected.
Across the pond, some analysts argued that the reduction of fiscal and political risks in the UK are tailwinds for the Pound, after Chancellor Rachel Reeves presented the budget in November.
Traders’ eyes are on the release of UK’s Gross domestic Product figures on Thursday and jobs data next week, which could determine the Bank of England’s path.
GBP/USD Price Forecast: Technical outlook
The GBP/USD is enjoying a spike on bullish momentum, as depicted by the pair hitting a three-day high at 1.3485, along with the recovery of the Relative Strength Index (RSI), which remains at bullish territory.
If the pair exceeds 1.3500, this clears the way to test the yearly high of 1.3567, ahead of 1.3600. Conversely, a drop below 1.3400 will expose the 200-day SMA at 1.3386.
Pound Sterling Price This week
The table below shows the percentage change of British Pound (GBP) against listed major currencies this week. British Pound was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.42% | -0.57% | -0.14% | -0.30% | -0.56% | -0.60% | -0.60% | |
| EUR | 0.42% | -0.16% | 0.33% | 0.12% | -0.14% | -0.18% | -0.18% | |
| GBP | 0.57% | 0.16% | 0.49% | 0.28% | 0.02% | -0.03% | -0.02% | |
| JPY | 0.14% | -0.33% | -0.49% | -0.19% | -0.45% | -0.49% | -0.48% | |
| CAD | 0.30% | -0.12% | -0.28% | 0.19% | -0.28% | -0.31% | -0.30% | |
| AUD | 0.56% | 0.14% | -0.02% | 0.45% | 0.28% | -0.05% | -0.04% | |
| NZD | 0.60% | 0.18% | 0.03% | 0.49% | 0.31% | 0.05% | -0.01% | |
| CHF | 0.60% | 0.18% | 0.02% | 0.48% | 0.30% | 0.04% | 0.00% |
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 British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).