The Pound Sterling advanced 0.31% as the greenback weakened on Monday, testing last week’s high of 1.2987. Investors eye crucial monetary policy decisions by the US Federal Reserve and the Bank of England.
The GBPUSD currency pair nears multi-week highs as disappointing US data fuels recession worries, pressuring Treasury yields.
The US Dollar remains pressured as retail sales in February rose by 0.2% MoM, missing estimates of 0.6% and improved compared to January’s -1.2% fall. Nevertheless, other data revealed by the New York Fed showed that manufacturing activity dipped from 5.7 to -20, with input prices increasing to their highest level in more than two years.
Recent data shows that the US economy continues to slow down, increasing recession fears. Therefore, traders had priced in 64 basis points of easing by the Fed, which has sent US Treasury yields plunging alongside the American currency.
The US 10-year Treasury note yields fell four and a half bps to 4.277%. Meanwhile, the DXY Dollar Index, which tracks the greenback’s performance against a basket of six currencies, dropped 0.34% to 103.38.
The BoE meets on Thursday this week, and it is expected to hold rates unchanged.
Despite this, interest rate futures traders estimate 50 bps of easing towards the end of 2025. After this, traders will eye Chancellor Rachel Reeves’ update next week on public finances.
GBPUSD chart by TradingView
(Source: OANDA)