9 May 2025,05:41
Daily Market Analysis
9 May 2025, 05:41
Key Takeaways:
*Pound under pressure after BoE rate cut: GBP weakens following a surprise 5–4 split vote at the BoE to lower interest rates by 25bps to 4.25%.
*Limited relief from UK-U.S. trade deal: While the deal reduces some tariffs, its narrow scope keeps broader trade uncertainty intact.
Market Summary:
The pound continued to edge lower on Thursday after the Bank of England cut its main interest rate by 25 basis points to 4.25%, a move that came with a rare three-way split among policymakers and renewed concerns about slowing global growth due to U.S. trade policies.
The central bank’s Monetary Policy Committee voted 5-4 in favour of the cut, with two members preferring to hold and two voting for a deeper reduction, underscoring growing uncertainty around inflation and economic activity. The decision coincided with the announcement of a limited UK-U.S. trade agreement, the first since President Donald Trump began imposing global tariffs.
“This will be good news all round, including for the UK economy,” BoE Governor Andrew Bailey said in a press conference, referring to the deal. “It will help to reduce uncertainty.”
Under the agreement, U.S. tariffs on UK car imports will be cut from 27.5% to 10%, and duties on UK steel will be dropped. In exchange, the UK will reduce trade barriers on U.S. beef and ethanol. However, the pact maintains a 10% baseline tariff introduced by the Trump administration in April, and analysts say the deal’s narrow scope limits its immediate economic impact.
Technical Outlook (GBP/USD):
Sterling weakened against the dollar, with GBP/USD last trading around 1.3240, down 0.4% on the day. The pair is testing support at 1.3235, with further losses likely if the level breaks. Technical indicators remain bearish, with the Relative Strength Index (RSI) at 36, suggesting limited bullish momentum.
A break below 1.3235 could open the door to the next support at 1.3170. If the level holds, however, the pair may rebound toward its short-term moving average. A move above the MA could bring the 1.3335 and 1.3395 resistance levels back into view.
Market participants will be watching for additional comments from BoE officials and developments on the trade front for further direction.
Traders are looking for further central bank commentary and developments on the trade front for fresh direction.
Resistance level: 1.3335, 1.3395
Support level: 1.3235, 1.3170
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