The Pound Sterling (GBP) flattens around 1.3200 against the US Dollar (USD) during the European trading session on Thursday. The GBP/USD pair turns flat as the US Dollar recovers its early losses, following comments from United States (US) President Donald Trump and China’s commerce ministry after the meeting between Trump and Chinese leader Xi Jinping.
At the time of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades flat around 99.20.
### Positive Developments in US-China Trade Talks
After trade talks with Chinese leader Xi Jinping, US President Trump claimed that the “meeting with Xi was amazing.” He said, “On a scale of 1 to 10, the meeting with Xi was a 12.” Trump further added that tariffs on China will be reduced from 57% to 47%, there will be no roadblocks on rare earth exports to Washington, and the purchase of soybeans by Beijing will begin immediately.
In response, the Chinese commerce ministry stated that Beijing will suspend export control measures announced on October 9 for a year and will expand agricultural trade with Washington.
These signs of an improving US-China trade relationship are favorable for the US Dollar.
### Daily Market Movers: Pound Sterling Gains Temporary Cushion Against US Dollar
The Pound Sterling gained temporary ground against the US Dollar on Thursday after revisiting an almost six-month low around 1.3140 the previous day. The Cable fell sharply on Wednesday following the Federal Reserve’s (Fed) decision to reduce interest rates by 25 basis points (bps) to 3.75%-4.00%. This was the second consecutive rate cut by the Fed this year.
The central bank was expected to announce a dovish interest rate decision, as recent US Consumer Price Index (CPI) data indicated that the impact of tariffs on inflation is not persistent. Additionally, deteriorating labor market conditions and the ongoing federal shutdown remained key reasons behind the Fed’s rate cut announcement.
Fed Chairman Jerome Powell also described the cut as “risk management,” noting that job creation has remained “very low.”
### Fed Chair Powell Signals Caution on Further Rate Cuts
Technically, lower interest rates by the Fed usually weigh on the US Dollar; however, the Greenback strengthened after Chair Powell argued against further monetary easing in the December policy meeting. He stated, “Another cut in December is far from assured, as inflation remains somewhat elevated relative to the goal.”
Powell’s comments signaling no support for an interest rate cut in December led investors to revise their dovish expectations. According to the CME FedWatch tool, traders now see a 70% chance that the Fed will hold interest rates steady in the range of 3.75%-4.00% in December, a significant increase from 9.1% seen earlier in the week.
### UK Outlook: Bank of England Monetary Policy in Focus
In the United Kingdom, the major trigger for the British currency will be expectations regarding the upcoming Bank of England’s (BoE) monetary policy decision scheduled for next week. Analysts at Goldman Sachs anticipate that the BoE will cut interest rates by 25 bps to 3.75% on November 6. The investment bank has turned dovish for November’s monetary policy due to a softening labor market.
Contrary to Goldman Sachs’ view, a recent Reuters poll showed that economists expect no further interest rate cuts by the BoE this year, with the central bank likely to restart its monetary-easing campaign in the first quarter of 2026.
### Technical Analysis: Pound Sterling Wobbles Around 1.3200
The Pound Sterling trades in a tight range around 1.3200 against the US Dollar on Thursday. The GBP/USD pair finds temporary support after hitting an almost six-month low near 1.3140 on Wednesday.
The outlook for the Cable remains bearish as it trades below the 200-day Exponential Moving Average (EMA), which sits around 1.3295. The 14-day Relative Strength Index (RSI) has fallen below 40.00, indicating fresh bearish momentum.
Looking downwards, the psychological level of 1.3000 will act as a key support zone. On the upside, the October 28 high around 1.3370 will serve as a significant resistance barrier.
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*Stay tuned for more updates as market conditions evolve.*
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