GBP/USD shows a decline, trading near 1.3760 during the early European session on Friday. The US Senate is preparing to deliver a spending agreement to the House as efforts intensify to prevent a government shutdown. The Bank of England is anticipated to maintain the bank rate at 3.75% during its upcoming meeting next week. The GBP/USD pair sees selling interest around 1.3760 in the early European session on Friday. The US Dollar shows an upward movement against the Pound Sterling following an agreement between US President Donald Trump and Senate Democrats to prevent a government shutdown. Market participants will monitor the US Producer Price Index data released later on Friday.
The US Senate may cast its vote as early as Thursday night to endorse a government funding package, following an agreement between Democrats and Trump to remove the comprehensive spending bill for the Department of Homeland Security. The Greenback strengthens against the GBP following this headline. On Thursday, Trump indicated that he would reveal his choice to succeed Federal Reserve Chair Jerome Powell on Friday, leading to heightened speculation that the selection may be former Fed governor Kevin Warsh.
“Overall, the market reaction has been favorable for the U.S. dollar, as a Warsh appointment would support the notion that the independence of the Fed will be safeguarded. Additionally, it suggests that while some reforms may be anticipated, there won’t be any significant alterations to the Fed’s structure.” Rodrigo Catril stated “And in particular, it’s also not going to necessarily mean that now we have a Fed that is at the whims of what President Trump or any other president would like them to do.”
The Bank of England is anticipated to maintain interest rates at 3.75% during the upcoming policymakers’ meeting next week, subsequent to the 25 basis points reduction declared in the December policy session. Analysts expect the forthcoming rate cut to take place in April or June at the earliest, with a year-end rate forecast hovering between 3.0% and 3.25%.