HG MARKETS:

GBP/USD continues its bullish momentum that began on April 8, trading near 1.3280 during Friday’s Asian session. The pair remains supported by a weakening US Dollar (USD), as investor concerns grow over the economic consequences of US-imposed tariffs. With market participants closely monitoring the progress of US trade negotiations, particularly with the UK, overall trading activity is subdued due to the Good Friday holiday.

The USD managed to find some temporary support following hawkish remarks from Federal Reserve Chair Jerome Powell. He warned that persistent inflation alongside sluggish growth could complicate the Fed’s dual mandate and raise the risk of stagflation. Despite these concerns, the CME FedWatch Tool indicates that markets are still pricing in approximately 86 basis points of rate cuts by the end of 2025, with the first cut anticipated in July. On the data side, US Initial Jobless Claims came in at 215,000 for the week ending April 12, better than expected, though Continuing Claims climbed by 41,000 to 1.885 million.

On the UK front, optimism surrounding trade talks has offered additional support to the British Pound. UK Chancellor Rachel Reeves is set to meet with US officials next week to push forward discussions on a bilateral trade deal. According to The Telegraph, the White House believes an agreement could be finalized within three weeks, which would be a significant boost for GBP sentiment.

UK economic indicators continue to send mixed signals. On one hand, strong wage growth and an uptick in GDP highlight the underlying resilience of the British economy. These positive developments suggest that the economy is maintaining momentum despite global uncertainties.

On the other hand, softening inflation data is increasing the likelihood of monetary easing by the Bank of England. The Consumer Price Index (CPI) for March declined to 2.6% year-over-year, missing expectations, while monthly inflation eased to 0.3%. More notably, core services inflation — a key metric watched by the BoE — dropped to 4.7%, reinforcing market expectations for potential interest rate cuts in the coming months.