The British pound (GBP) is currently navigating a period of uncertainty following mixed remarks from Bank of England (BoE) Governor Andrew Bailey. His comments about increasing slack in the labor market and potential impacts of a National Insurance hike on consumer prices have left market sentiment cautious. As a result, the pound has not established a clear trend, with minimal UK economic data available to guide movements towards the week’s end.
Recent developments in U.S. trade policy, including the imposition of a 10% reciprocal tariff on UK goods, add another layer of complexity to the pound's outlook. Analysts indicate that such trade tensions may influence GBP's performance, especially as the UK strives to solidify its trade position post-Brexit.
Currently, the GBP/USD exchange rate is at 1.3721, reflecting a 2.9% increase above its three-month average of 1.3337, after trading in a stable range of 7.9% from 1.2725 to 1.3729. Meanwhile, the GBP/EUR is slightly behind its three-month average, at 1.1707, just 0.6% lower than the average of 1.1778, having fluctuated within a tight range of 4.0% from 1.1517 to 1.1979. The GBP/JPY pair is particularly strong, recently reaching 90-day highs near 198.5, which is 2.8% above its three-month average, trading in a stable 6.3% range from 186.7 to 198.5.
Market analysts suggest that the pound’s future trajectory will heavily depend on the UK economy's recovery, BoE policy shifts, and ongoing trade negotiations. Investors should remain vigilant as these factors unfold, as they will significantly sway GBP's movements against major currencies.
