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- GBP/USD gains traction to around 1.3195 in Tuesday’s early European session.
- Gradual and careful policy-easing approach by the BOE supports the GBP.
- The UK employment and US CPI inflation reports will be in the spotlight later on Tuesday.
The GBP/USD pair climbs to near 1.3195 during the early European session on Tuesday. The Pound Sterling (GBP) edges higher against the Greenback due to positive developments surrounding the US and the UK trade agreement last week. The UK employment and US inflation reports will be the highlights later on Tuesday.
US President Donald Trump last week said that he will continue to impose a new 10% tariff on imports of most British goods but will reduce higher tariffs on imports of British cars, steel and aluminium. This positive developments surrounding the US-UK trade deal lift the Cable.
Furthermore, a gradual and careful policy-easing approach by the BOE contributes to the GBP’s upside. The UK central bank cut interest rates by a quarter percentage point in a divided decision last week and suggested that the growth risks posed by Trump’s global trade war haven’t derailed its plan to ease policy only cautiously. The BoE estimated the UK economy to grow at a faster pace of 1%, up from 0.75% projected in the February meeting.
Traders await the release of the US Consumer Price Index (CPI) for April, due later on Tuesday. This report might offer more clues whether the Federal Reserve (Fed) will resume the monetary policy easing cycle in the next meeting. In case of a hotter-than-expected outcome, this could lift the Greenback against the GBP in the near term.
