FX Report: 28th April - 1st May 2025
Buy Side Target
1.3580
Sell Side Target
1.2850
Current Price
1.3400
1.3300 serves as a key level to allow us to understand potential upside movement on price. Should 1.3300 break, we can expect price to find value at the regions of 1.2850 should be there no changes in current market forces. Should 1.3400 struggle to break we may be looking at a neutral market condition allowing us to forge new value in the markets. Paying attention to upcoming economic indicators this week would help traders to gauge clearer market forces. Our bullish target of 1.3580 still remains with 1.3500 as the first station for price.
United Kingdom: Economic Optimism Amid Potential Policy Shifts
Sterling's Strength and Asset Rally: The British pound reached a three-year high against the U.S. dollar, driven by renewed investor interest in UK assets and strong market performance. The FTSE 100 marked its longest winning streak since 2016, up 4% year-to-date, outpacing the S&P 500 by 18% in dollar terms.
Bank of England's Dovish Stance: The Bank of England maintained its interest rate at 5.25% but signalled the possibility of a rate cut as early as next month, citing that inflation is "moving in the right direction."
Political Endorsements and Economic Confidence: UK Chancellor Rachel Reeves received endorsements from major financial figures, including JPMorgan CEO Jamie Dimon, who praised the UK's pro-growth agenda and commitment to market stability. Such endorsements bolstered investor confidence in the UK's economic direction.
United States: Economic Contraction and Inflationary Pressures
GDP Contraction: The U.S. economy contracted by 0.3% in Q1 2025, marking the first decline since early 2022. This downturn was primarily due to a surge in imports as businesses rushed to stockpile goods ahead of impending tariffs introduced by President Trump's administration.
Labour Market Weakness: April's ADP private payrolls report showed an increase of only 62,000 jobs, significantly below expectations, indicating a potential slowdown in job creation.
Inflation Concerns: The Personal Consumption Expenditures (PCE) price index, the Federal Reserve's preferred inflation gauge, rose to 3.5% on an annualized basis in Q1, exceeding the Fed's 2% target. This increase complicates the central bank's potential plans for rate cuts.
Trade Tensions: President Trump's introduction of new tariffs heightened trade tensions. These measures contributed to market volatility and raised concerns about potential stagflation—a combination of stagnant economic growth and high inflation.
Last FX Report: 21st - 24th April 2025
Buy Side Target
1.3500
Sell Side Target
1.2850
Current Price
1.3345
Market Outcome
Bullish
We saw price stall around our key level of 1.3350, this allowed us to understand that momentum was fading on the bullish trend around our key levels, looking for signs of new bullish pressure to be found around the 1.3300 region. These confirmations would allow us to continue trading GBP/USD higher to our targets of 1.3500. Understanding the type of market we are in, our trader's were able to capitalise on both buys and sells at the correct prices for short-term trading.
*Contracts for difference (CFDs) are complicated financial contracts based on leverage, which can possibly result in huge fluctuations in profits or losses. Therefore, it is essential to study and understand CFDs thoroughly before embarking on investment. You should at the same time stay conscious and ready yourself for the potential risk of losing a part or your whole capital. This outlook is non-financial advice, you should consult with your personal financial advisor before making any investment decisions.
How we traded this outlook:
