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- GBP/USD weakens to around 1.3760 in Friday’s early European session.
- The US Senate is poised to send the House a spending deal in the race to avert a government shutdown.
- The BoE is expected to leave the bank rate at 3.75% at its meeting next week.
The GBP/USD pair attracts some sellers near 1.3760 during the early European session on Friday. The US Dollar (USD) edges higher against the Pound Sterling (GBP) after US President Donald Trump and Senate Democrats struck a deal to avoid a US government shutdown. Traders will keep an eye on the US Producer Price Index (PPI) data later on Friday.
The US Senate could vote as soon as Thursday night to approve a government funding package after Democrats reached a deal with Trump to strip out the full-year spending bill for the Department of Homeland Security (DHS). The Greenback gains ground against the GBP in an immediate reaction to this headline.
Trump said on Thursday he planned to announce his pick to replace Federal Reserve (Fed) Chair Jerome Powell on Friday, with speculation intensifying that the nod will go to former Fed governor Kevin Warsh.
“So overall, the market reaction, it’s been positive for the U.S. dollar because a Warsh appointment would not only play to the view that Fed independence will be protected, it would also play to the view that whilst some reforms should be expected, it’s not going to really dramatically change the Fed. And in particular, it’s also not going to necessarily mean that now we have a Fed that is at the whims of what President Trump or any other president would like them to do,” said Rodrigo Catril, Senior FX Strategist, National Australia Bank, Sydney.
The Bank of England (BoE) is expected to hold interest rates steady at 3.75% when policymakers meet next week, following a 25 basis points (bps) cut announced in the December policy meeting. Economists anticipate the next rate reduction to occur in April or June at the earliest, with an end-of-year rate projection of around 3.0% to 3.25%.
