The GBP/USD currency pair remains stable at approximately 1.3230. That’s indicative of a rather flattish trading range around 1.3232 as markets are a bit muted adjusting to a thin liquidity backdrop. US markets closed early ahead of the Thanksgiving holiday. In response, the trading picture changed, and in dramatic fashion, with the pair now rocking a 24h change of 0%. The British Pound is now the most solid currency against the US Dollar. This increase is driven by a new, strongly positive, Autumn Budget delivered by UK Chancellor of the Exchequer Rachel Reeves.
While the budget received applause, it came with a cut in expected economic growth rates for 2025. As you might expect, the markets have welcomed the budget hawk enthusiasm. Consequently, the Pound has been surprisingly strong versus the American dollar. Instead, look for a more stable economic environment out the gate. The probability of a 25-basis-point rate reduction by the Federal Reserve now stands at 85%. New US Dollar Sell Pressure from Anticipation of a Rate Cut. This mixture of conditions is providing positive reinforcement for the GBP/USD currency cross.
Market Reactions to Economic Indicators
Even amid the US holiday season, economic data kept coming in. Latest numbers had Initial Jobless Claims increase only to 216,000, better than expectations of 225,000. This last figure is a nice reminder that notwithstanding some hand-wringing, the US labor market seems to be on pretty solid footing still.
Unfortunately, the market’s reaction to these figures has been muted, largely due to Thanksgiving holiday. Analysts noted that “fears about slow growth, weak productivity and sticky inflation are not reflective of an attractive investment backdrop.” This ambiance reflects the understandable nervousness investors are feeling given today’s economic climate.
British Pound’s Performance
The British Pound is rolling in all-time amazing aplomb against the US Dollar. It’s still trading pretty firm ahead of the long weekend. A strong downtrend on the GBP/USD daily chart makes the case to support confidence in the Pound’s ability to weather the storm. Traders thus far have been ready to defend the currency, regardless of external pressure and economic prediction.
With January 1st approaching and liquidity still thin from the New Year’s holiday, all eyes are on developments that will impact the mood of the market. The heat map displaying percentage changes of major currencies reveals how the Pound has maintained its competitive stance against its peers.