The British Pound (GBP) has rebounded significantly on Monday, driven by increased risk aversion among traders due to rising concerns over the independence of the US Federal Reserve (Fed). The GBP/USD pair surged to 1.3473, marking an increase of 0.55%, as investors shifted their focus towards G10 currencies amid a notable sell-off of the US Dollar.
Recent comments from Fed Chair Jerome Powell regarding political pressures on the central bank have intensified fears about its independence. During a weekend statement, Powell revealed that the Fed had received grand jury subpoenas from the Justice Department, hinting at potential criminal charges. He indicated that this situation reflects ongoing political pressure, stating, “the threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President.”
This turmoil has led to a sharp decline in the value of the US Dollar. The US Dollar Index (DXY), which tracks the dollar’s performance against a basket of six major currencies, fell by 0.35%, settling at 98.79. Despite US President Donald Trump denying any knowledge of the investigation, he has consistently criticized Powell for not reducing interest rates as he anticipated.
Analysts suggest that the reduction of fiscal and political risks in the UK, particularly following Chancellor Rachel Reeves‘ budget presentation earlier this month, has provided a favorable backdrop for the Pound. Traders are now closely monitoring upcoming economic data from the UK. The Gross Domestic Product (GDP) figures set for release on Thursday and job statistics next week will be crucial in shaping the Bank of England’s monetary policy direction.
GBP/USD Technical Outlook
The GBP/USD pair is currently experiencing bullish momentum, reaching a three-day high of 1.3485, supported by a recovery in the Relative Strength Index, which remains within bullish territory. Should the pair surpass the 1.3500 mark, it could pave the way for testing the yearly high of 1.3567, with a further target set at 1.3600. Conversely, a decline below 1.3400 would bring the 200-day Simple Moving Average (SMA) at 1.3386 into focus.
This week’s performance of the British Pound against major currencies illustrates its strength, particularly against the US Dollar. The table below summarizes the percentage changes:
– GBP/USD: +0.57%
– GBP/EUR: +0.16%
– GBP/JPY: +0.49%
– GBP/CAD: +0.28%
– GBP/AUD: +0.02%
As the market awaits critical economic indicators, the landscape remains dynamic. The interplay between geopolitical developments and economic data will likely dictate the direction of the GBP and its counterparts in the near term.
