On pace for its best six-monthly performance in over four years, 2025 has proven an interesting year for GBP/USD. In today’s session, GBP/USD trades higher on renewed trade policy optimism and a weaker dollar.
Key Takeaways
- Following the announcement of a major UK-EU trade deal this morning, GBP/USD trades +0.49% higher in today’s session, at around ~1.33468
- Recently, striking a first-of-its-kind trade agreement with the United States and a further deal with India, optimism about UK trade policy is boosting GBP/USD pricing, compounded by a general weakening of the US dollar
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GBP/USD: UK-EU ‘reset’ deal dubbed the most significant since Brexit
Marketed as a ‘reset’ on relations, this morning’s announcement of a comprehensive UK-EU trade agreement has boosted sterling pricing and represents the third major trade deal the UK government has made in the last thirty days.
Spanning a range of crucial sectors, including fishing, energy, and agriculture, the agreement signifies a strengthening of UK-EU relations, which have been understandably shaky since the United Kingdom’s departure from the European Union in 2020.
As for GBP/USD pricing, the suggestion of further economic collaboration between the United Kingdom and the European Union has historically been positive for cable, with prices exceeding 1.34000 earlier today for the first time since May 6th.
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Currency Power Balance tool, OANDA Global Markets,19/05/2024
GBP/USD: Cable gains amplified by dollar weakness
With the recent downgrade of the United States’ credit rating serving as a somewhat unfortunate welcome to the weekend, the fallout of Moody’s report Friday evening has undeniably been negative for the greenback.
Downgrading outlook from stable to negative, the credit-rating agency raised questions over escalating national debt, quoting “Successive US administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs.”
Having stayed silent on the downgrade, the report could perhaps have come at a better time for President Donald Trump, who hopes to seek further congressional approval for his “big, beautiful” tax cut bill this week.
With the perception of the US economy somewhat swayed by Moody’s latest report, we can expect GBP/USD to gain in the short term.
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A chart showing the recent price action of GBPUSD. OANDA, TradingView, 19/05/2024
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GBP/USD technical analysis
- Remaining in an uptrend since January, GBP/USD outlook remains bullish in the medium to short term. Should price break above ~1.33757, bulls will likely target previous highs of 1.34442
- When using the 14-period RSI on the daily timeframe, GBP/USD markets are building bullish momentum, breaking above the SMA for the first time since early April, suggesting a potential for further moves to the upside
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