Pound Sterling Price News And Forecast: GBP/USD Appreciates as USD Loses Ground Amid Lower Treasury Yields

USD/CHF weakens to around 0.9030 in Wednesday’s early European. 

Global geopolitical stress boosts the safe-haven flows, supporting the CHF. 

Fed’s Daly said the central bank should keep short-term borrowing costs where they are until the progress is more visible.

The USD/CHF pair softens to near 0.9030 during the early European session on Wednesday. Tension-filled negotiations on the Russia-Ukraine conflict boost the safe-haven flows, benefiting the Swiss Franc (CHF). Traders will take more cues from the FOMC Minutes, which will be published later on Wednesday. 

Ukraine President Volodymyr Zelenskiy said no peace deal could be made behind his back, per Reuters. Zelenskiy decided to postpone his visit to Saudi Arabia planned for Wednesday until March 10 to avoid giving "legitimacy" to the United States-Russia meetings. Investors will closely watch the developments surrounding the Russia-Ukraine peace talks. Any signs of escalating tensions between the two countries could boost the safe-haven currency like the CHF and create a headwind for the pair. 

Data released by the Federal Reserve Bank of New York on Tuesday showed that the NY Empire State Manufacturing Index climbed to 5.7 in February from a fall of 12.6 in January. Meanwhile, San Francisco Fed President Mary Daly said on Tuesday that prospects of further rate cuts in 2025 remain uncertain despite an overall positive lean to US economic factors. 

Market players brace for remarks by Fed officials later this week to gather more clues about the path ahead for US interest rates. Any hawkish comments from Fed policymakers could underpin the Greenback against the CHF in the near term.

Source: FXSTREET

EUR/USD trades with mild gains near 1.0450 in Wednesday’s Asian session.

Trump floated 25% tariffs on US auto, drug and chip imports. 

Eurozone ZEW Economic Sentiment Index jumped to 24.2 in February vs. 24.3 expected. 

The EUR/USD pair posts modest gains to around 1.0450 during the Asian trading hours on Wednesday, bolstered by the weakening of the US Dollar (USD). However, tariff concerns and tense Russia-Ukraine negotiations might boost the Greenback, a safe-haven currency, and cap the upside for the major pair. 

US President Donald Trump said late Tuesday that he would likely impose tariffs on automobile, semiconductor and pharmaceutical imports of around 25%, with an announcement coming as soon as April 2. 

Ukraine President Volodymyr Zelenskiy said no peace deal could be made for the time being. He postponed his visit to Saudi Arabia planned for Wednesday until March 10 to avoid giving "legitimacy" to the US-Russia talks. The uncertainty, geopolitical tensions and tariff threats could lift the USD and act as a tailwind for the pair. 

Investors await the release of the FOMC Minutes for the January meeting, which are due later on Wednesday. This report could offer some hints about how policymakers are weighing the risk of a global trade war.

Across the pond, the Eurozone ZEW Economic Sentiment Index came in at 24.2 in February versus 18.0 prior, missing the estimation. The rising bets that the European Central Bank (ECB) will further cut the interest rates three times this year might weigh on the Euro (EUR). 

Source: FXSTREET

United Kingdom’s Office for National Statistics will publish the January CPI data on Wednesday.

The annual UK headline and core CPI inflation are expected to increase in January.

The Pound Sterling braces for volatility on the UK CPI report data release amid a prudent BoE.

The high-impact Consumer Price Index (CPI) data from the United Kingdom (UK) for January will be published by the Office for National Statistics (ONS) on Wednesday at 07:00 GMT.

The Pound Sterling (GBP) could witness a big reaction to the UK CPI inflation report, which will likely have a strong bearing on the Bank of England’s (BoE) interest rate-cut path amid upside risks to inflation.

What to expect from the next UK inflation report?

The UK Consumer Price Index is expected to rise at an annual rate of 2.8% in January after increasing by 2.5% in December.

The reading is set to move further away from the BoE’s 2.0% target.

Core CPI inflation, which excludes energy, food, alcohol and tobacco prices, is forecast to climb to 3.6% YoY in January from December’s 3.2%.

According to a Bloomberg survey of economists, official data is expected to show that service inflation jumped to 5.2% in January after falling to 4.4% in December.

Meanwhile, the British monthly CPI is seen declining 0.3% in the same period, as against the previous growth of 0.3%.

Previewing the UK inflation data, TD Securities analysts noted: “Inflation is set to rebound sharply after December airfares were surveyed early in the month and missed the usual seasonal bump. The Monetary Policy Committee (MPC) expects this too, and is looking for core inflation of 3.9% year-on-year (YoY), having set the bar quite high for upside inflation surprises in the next few months. Still, it'll make for uncomfortable reading even if some of the drivers are temporary.” 

How will the UK Consumer Price Index report affect GBP/USD?

At its monetary policy meeting earlier this month, the BoE lowered the benchmark policy rate by 25 basis points (bps) to 4.5% after the UK annual headline and services inflation unexpectedly cooled in December.

However, BoE Governor Andrew Bailey maintained a cautious stance on future rate cuts, noting that "we must judge in future meetings whether underlying inflation pressures are easing enough to allow further cuts."

"We must proceed carefully,” he added.

Therefore, the January UK CPI data will be closely scrutinized for fresh hints on the BoE’s easing trajectory.

A hotter-than-expected headline and core inflation data will strengthen the expectations of the BoE’s prudent approach to policy easing, providing a fresh boost to the Pound Sterling uptrend. In this case, GBP/USD could target the 1.2700 round figure. On the other hand, a downside surprise in the inflation readings could rekindle bets for aggressive BoE rate cuts, fuelling a GBP/USD correction from over two-month highs.

Dhwani Mehta, Asian Session Lead Analyst at FXStreet, offers a brief technical outlook for the major and explains: “GBP/USD is challenging the key resistance near 1.2605 heading into the UK CPI data release, with the 14-day Relative Strength Index (RSI) momentum indicator in the daily chart holding firm above 50. The 21-day Simple Moving Average (SMA) is on the verge of crossing the 50-day SMA from below, which, if it occurs on a daily closing basis, will confirm a Bull Cross. These technical indicators point to a sustained uptrend for the pair.”

Mehta adds: “However, the pair needs acceptance above the 100-day SMA at 1.2665 to initiate a meaningful upside toward the 200-day SMA at 1.2788. Ahead of that level, the 1.2700 round level must be recovered. On the flip side, the immediate support is seen at the 21-day SMA and the 50-day SMA confluence at around 1.2460. Should the selling pressure intensify, the rising trendline support drawn from the January 13 low at 1.2357 will come to the buyers’ rescue.

Economic Indicator

Consumer Price Index (YoY)

The United Kingdom (UK) Consumer Price Index (CPI), released by the Office for National Statistics on a monthly basis, is a measure of consumer price inflation – the rate at which the prices of goods and services bought by households rise or fall – produced to international standards. It is the inflation measure used in the government’s target. The YoY reading compares prices in the reference month to a year earlier. Generally, a high reading is seen as bullish for the Pound Sterling (GBP), while a low reading is seen as bearish.

Source: FXSTREET

Oil prices edged higher on Wednesday amid oil supply disruptions in the US and Russia and as markets awaited clarity on the Ukraine peace talks.

Brent crude futures LCOc1 gained 20 cents, or 0.3% at US$76.04 a barrel at 0146 GMT, climbing for a third day.

US West Texas Intermediate crude futures CLc1 for March rose 23 cents, or 0.3%, to US$72.08 a barrel, up 1.7% from the close on Friday after not settling on Monday because of the Presidents' Day public holiday. The March contract expires on Thursday and the more active April contract gained 0.3% to US$72.04.

Russia said oil flows through the Caspian Pipeline Consortium (CPC), a major route for crude exports from Kazakhstan, were reduced by 30%-40% on Tuesday after a Ukrainian drone attack on a pumping station. A 30% cut would equate to the loss of 380,000 barrels per day of supply to the market, according to Reuters calculations.

Meanwhile, cold weather threatened US oil supply, with the North Dakota Pipeline Authority estimating that production in the country's No 3 producing state would be down by as much as 150,000 bpd because of the cold.

US President Donald Trump's administration said on Tuesday it had agreed to hold more talks with Russia on ending the war in Ukraine. A deal could ease or help remove sanctions that have disrupted the flows of Russian oil shipments.

Israel and Hamas will also begin indirect negotiations on a second stage of the Gaza ceasefire deal, officials said on Tuesday.

However, Trump said on Tuesday he intends to impose auto tariffs "in the neighbourhood of 25%" and similar duties on semiconductors and pharmaceutical imports. Tariffs could raise prices for consumer products, weaken the economy and reduce demand for fuel.

Source: Theedgemarkets

The US dollar held firm on Wednesday on the back of tariff concerns and tense Russia-Ukraine negotiations, while the New Zealand dollar slid after the central bank delivered a super-sized interest rate cut.

The Reserve Bank of New Zealand reduced its benchmark rate by 50 basis points to 3.75% on Wednesday as widely expected. The central bank has now cut rates by 175 basis points since August as the central bank races to boost a sluggish economy and curb rising unemployment.

The kiwi was last down 0.3% at US$0.5687 following the decision and bank commentary that suggested more cuts were likely.

In the broader market, investors sized up the latest note in US President Donald Trump's tariff crescendo and uncertainty after initial Russia-Ukraine peace talks finished without Kyiv or Europe at the table.

A majority of economists polled by Reuters this month expect another 50-basis-point cut in April.

Ukraine President Volodymyr Zelenskiy said no peace deal could be made behind his back. He postponed his visit to Saudi Arabia planned for Wednesday until March 10 to avoid giving "legitimacy" to the US-Russia talks.

Russia hardened its demands, notably insisting it would not tolerate the Nato alliance granting membership to Kyiv.

The Trump administration said on Tuesday it agreed to hold more talks with Russia on ending the war in Ukraine.

Hopes of a peace agreement buoyed the euro to a two-week high last week, but the EU bloc currency has slid in recent days. It was last 0.03% lower at US$1.0442.

"The euro (is) a little unsettled by the clear divisions between the US and Europe regarding the war in Ukraine," said Sean Callow, senior FX analyst at InTouch Capital Markets.

The greenback shot up on Tuesday, helped by euro softness, but remains not far off a two-month low of 106.56 touched on Friday despite more tariff pledges.

Trump said on Tuesday he intends to impose auto tariffs "in the neighborhood of 25%" and similar duties on semiconductors and pharmaceutical imports.

"So long as Trump is viewed as the boy who cried wolf on tariffs, chunky USD long positions will come under pressure," Callow said.

Trump has unleashed a steady crush of levies and tariff threats in the first month of his presidency, fuelling uncertainty about the impact both abroad and domestically.

Investors were awaiting the release of minutes of the Federal Reserve's January meeting due later in the day for clues on how policymakers are weighing the risk of a global trade war.

Markets have priced in about 35 basis points of cuts for 2025.

The dollar index =USD, which measures the greenback against a basket of rivals, rose 0.04% to 107.04.

The yen strengthened 0.05% to 152 per dollar. Japan's solid October-December GDP data on Monday, coupled with recent strong inflation, has bolstered rate hike bets.

Prospects of a rate hike at the Bank of Japan's July meeting are growing but questions remain about the pace and extent of continued tightening.

The spotlight will be on board member Hajime Takata, who is scheduled to give remarks on Wednesday, and national CPI data released on Friday.

Sterling was flat at US$1.2613 after brushing a two-month high of US$1.2641 in early trade on Wednesday. An inflation reading for the UK is scheduled later on Wednesday, following Tuesday's data showing accelerating British wage growth.

The Australian dollar ticked down 0.07% to US$0.63495 after data showed domestic wages rose at the slowest annual pace in more than two years in the fourth quarter.

The Reserve Bank of Australia cut rates as expected on Tuesday but cautioned on further easing.

Source: Theedgemarkets

Key Highlights

Bitcoin price is consolidating above the $94,000 support zone.

BTC is facing hurdles near a key bearish trend line with resistance at $97,250 on the 4-hour chart.

Ethereum price is struggling to gain pace for a move above $2,850 and $3,000.

GBP/USD aims for a move above the 1.2630 and 1.2650 levels.

Bitcoin Price Technical Analysis

Bitcoin price made a couple of attempts to settle above $100,000 against the US Dollar. However, BTC bears remained active and prevented a steady increase.

Looking at the 4-hour chart, the price remained stable above the 76.4% Fib retracement level of the upward move from the $91,352 swing low to the $102,295 high, but it is also below the 100 simple moving average (red, 4-hour) and the 200 simple moving average (green, 4-hour).

On the upside, the price could face resistance near the $97,500 level and the 100 simple moving average (red, 4-hour). There is also a key bearish trend line forming with resistance at $97,250 on the same chart.

The next key resistance is $100,000 and the 200 simple moving average (green, 4-hour). A successful close above $100,000 might start another steady increase. In the stated case, the price may perhaps rise toward the $105,000 level.

Immediate support is near the $95,500 level. The next key support sits at $94,000. A downside break below $94,000 might send Bitcoin toward the $92,000 support. Any more losses might send the price toward the $91,200 support zone.

Looking at Ethereum, there was a recovery wave above $2,650 but the bears remained active near the $2,850 resistance zone.

Today’s Economic Releases

US Housing Starts for Jan 2025 (MoM) – Forecast 1.40M, versus 1.499M previous.

US Building Permits for Jan 2025 (MoM) – Forecast 1.460M, versus 1.482M previous.

Source: ACTIONFOREX