The Pound Sterling (GBP) fell against major currencies on Tuesday as softer UK shop price data reinforced expectations of monetary easing by the Bank of England (BoE).
The British Retail Consortium (BRC) reported that overall shop prices declined 0.3% in October from September — the first monthly drop since March. The decline has strengthened dovish expectations for the BoE, as traders anticipate potential rate cuts to support the UK economy amid cooling inflation pressures.
At the same time, global market sentiment improved after US President Donald Trump voiced optimism over reaching a US-China trade deal. Speaking aboard Air Force One en route to Tokyo, Trump said he expected an agreement to be announced after meeting Chinese President Xi Jinping later this week in South Korea. He also suggested a possible visit to China in early 2026.
Further optimism was fueled by US Treasury Secretary Scott Bessent, who indicated Washington would not proceed with the previously announced 100% tariffs on Chinese goods and expressed confidence that Beijing would postpone restrictions on rare earth exports.
Fed Rate Cut Expectations Support Market Sentiment
The US Dollar Index (DXY) slipped 0.2% to 98.60 as investors awaited Wednesday’s Federal Reserve policy decision, with markets widely expecting another rate cut following softer US inflation data and signs of a cooling labor market.
Fed Chair Jerome Powell recently warned of “rising downside risks” to employment, echoing concerns raised by other FOMC members. The US CPI report released last Friday showed prices rising 0.3% in September, slightly below the expected 0.4%, reinforcing expectations of further monetary easing.
Meanwhile, the ongoing US government shutdown, now entering its fourth week, has heightened economic uncertainty. The Fed’s September dot plot projected that policymakers see rates falling to around 3.6% by year-end, suggesting another cut is likely in December.
GBP/USD Technical Outlook
The GBP/USD pair retreated toward 1.3300 during European trading, surrendering earlier gains. The pair continues to hover around its 200-day Exponential Moving Average (EMA) near 1.3300, with momentum indicators showing limited direction.
The 14-day Relative Strength Index (RSI) sits near 40.00, signaling potential downside risk. A break below 1.3300 could open the door to the August 1 low at 1.3140, while resistance lies near the 1.3500 psychological level.
Currency Market Snapshot
| Base Currency | EUR | GBP | JPY | CAD | AUD | NZD | CHF |
|---|---|---|---|---|---|---|---|
| USD | -0.09% | +0.20% | -0.59% | +0.07% | +0.08% | +0.03% | -0.21% |
| EUR | +0.09% | +0.29% | -0.53% | +0.16% | +0.18% | +0.09% | -0.13% |
| GBP | -0.20% | — | -0.79% | -0.13% | -0.11% | -0.17% | -0.42% |
| JPY | +0.59% | +0.79% | — | +0.68% | +0.69% | +0.64% | +0.39% |
The US Dollar was weakest against the Japanese Yen, while the Pound Sterling underperformed across the board.