Fundamental Market Analysis for March 19, 2025 GBPUSDEvent to pay attention to today:
20:00 EET. USD - FOMC Rate Decision
GBPUSD:
The GBP/USD pair is currently experiencing a decline, trading near 1.29900 during Asian hours on Wednesday after rising in the previous two sessions. The pair is encountering difficulties as the US Dollar (USD) remains strong, supported by stable US Treasury bond yields ahead of the Federal Reserve's (Fed) interest rate decision later in the day. Market expectations are that the Fed will maintain its current interest rates, in light of ongoing concerns regarding inflation and economic uncertainty.
The U.S. Dollar Index (DXY), a measure of the dollar's strength against six major currencies, is currently trading near 103.40. Meanwhile, yields on 2-year and 10-year US Treasuries are currently at 4.04% and 4.29%, respectively. However, the US dollar has experienced some pressure due to weak economic data from the US and recent tariff threats from US President Donald Trump, contributing to investor uncertainty.
Traders are closely monitoring the Fed's updated economic forecasts for further indications regarding the future trajectory of US interest rates. Any indications of a hawkish stance from Fed policymakers could potentially weaken the US dollar against its counterparts.
In addition to the economic factors, The Wall Street Journal reports that Trump has dismissed two Democratic commissioners of the Federal Trade Commission (FTC). The legality of this action is being contested, and there is speculation that it may set the stage for the dismissal of Fed Chairman Jerome Powell and other members of the Federal Reserve.
The British pound (GBP) is trading cautiously as investors focus on the Bank of England's (BoE) interest rate decision scheduled for Thursday. Market expectations are for the Bank of England to maintain borrowing costs at 4.5%, with a predicted 7-2 vote split.
Bank of England Monetary Policy Committee (MPC) members Catherine Mann and Swati Dhingra are expected to favour a rate cut. At the February meeting, both officials advocated for a 50 basis points (bps) rate cut, while the majority supported a more conventional 25 bps reduction.
Trading recommendation: SELL 1.29700, SL 1.30300, TP 1.28900
