GBP/USD slumps on Trump’s tougher rhetoric

Pound Sterling edges higher as traders price in two BoE rate cut odds

GBP/USD inches higher after registering modest losses in the previous day, trading around 1.3230 during the Asian hours on Friday. Trading activity may remain subdued due to the Good Friday holiday. The Pound Sterling (GBP) receives some support as markets are pricing in two Bank of England rate hikes in 2026 amid rising energy prices and inflation concerns. However, BoE Governor Andrew Bailey recently warned that expectations may be overstated.

However, the upside of the GBP/USD pair could be limited as the US Dollar (USD) could gain ground amid rising safe-haven demand following the recent Iran threats from US President Donald Trump. Read more…

GBP/USD trapped below 1.33 as the BoE’s rate dilemma deepens

Thursday’s session was a downer for the British Pound. GBP/USD opened near 1.3300, sold off steadily through the day, and closed around 1.3220, losing 0.65%. The 50-day exponential moving average (EMA) near 1.3400 and the 200-day EMA around 1.3360 both remain a tricky technical hurdle, and the pair continues to close well below both. The Stochastic RSI sits at 73, which is elevated but not yet overbought, meaning there is room for the selloff to extend before momentum indicators start flashing warning signs. Looking lower, there is not much standing between current levels and the 2026 low near 1.3080 set in mid-March.

It is worth stepping back and appreciating how dramatically the outlook for the Bank of England (BoE) has shifted since the Iran war began. In February, markets were pricing in at least two rate cuts for 2026, with a move as early as March looking like a near certainty. The BoE had already cut rates by 150 basis points since August 2024, bringing the Bank Rate to 3.75%, and UK inflation had been falling toward the 2% target. Then the Strait of Hormuz closed, Oil surged above $100, and everything changed. By mid-March, swap markets had flipped entirely, pricing in as many as four rate hikes. That number has since come down to around two, but the mere fact that the market went from expecting easing to pricing tightening in the span of weeks tells you how much damage the energy shock has done to the UK’s inflation outlook. The BoE’s own staff now projects Consumer Price Index (CPI) inflation reaching 3.5% by the third quarter of 2026, up from a pre-war forecast of around 2%. Read more…

GBP/USD slides toward 1.3200 as Trump threats boost US Dollar

The British Pound retreats during the North American session after US President Donald Trump escalated the conflict, hinting that it will at least extend for two to three weeks. At the time of writing, the GBP/USD trades at 1.32144, down 0.40%.

Late Wednesday, Trump commented that the mission in Iran will be finished very fast and warned Tehran that the US would strike energy plants and Oil facilities if there is no deal. He reiterated that the US did not need the Strait of Hormuz, challenging allies to work to reopen it, given its dependence on energy products from the Middle East. After this, the Greenback rallied, global equities dropped, and crude prices surged. Read more…