<\/p>\n
The Pound Sterling (GBP) ticks lower\u00a0against the US Dollar (USD) in Friday\u2019s North American\u00a0session but holds\u00a0the key support of 1.2400. The GBP\/USD pair<\/a>\u00a0remains subdued\u00a0as\u00a0the US Dollar\u2019s safe-haven demand has strengthened after United States (US) President Donald Trump reiterated his intentions to impose 25% tariffs on Canada and Mexico from Saturday and 100% on BRICS if they try to replace the US Dollar with a new currency in international trade.<\/p>\n The US Dollar Index<\/a> (DXY), which tracks the Greenback\u2019s value against six major currencies, posts a fresh weekly high of 108.36.<\/p>\n On his social media platform, TruthSocial, Trump said, “We are going to require a commitment from these seemingly hostile countries that they will neither create a new BRICS currency nor back any other currency to replace the mighty US Dollar, or they will face 100% tariffs.” He added that there is no chance that \u201cBRICS will replace the US Dollar in International trade\u201d or anywhere else, and any country that tries should say, \u201cHello to Tariffs, and goodbye to America!”<\/p>\n Market participants believe that President Trump’s higher tariffs would be inflationary for the US economy, which could force the Federal Reserve (Fed) to keep interest rates at their current levels for longer. On Wednesday, the Fed announced a pause in the easing policy cycle and kept borrowing rates<\/a> unchanged in the range of 4.25%-4.50%.<\/p>\n Fed Chair Jerome Powell<\/a> said that monetary policy adjustments will become appropriate when central bank officials see \u201creal progress on inflation or at least some weakness in the labor market.\u201d<\/p>\n Meanwhile, the US Personal Consumption Expenditures Price Index<\/a> (PCE) data for December has shown that price pressures rose expectedly. The core PCE inflation, the Fed\u2019s preferred inflation gauge, rose\u00a0at a faster pace of 0.2%, as expected, month-on-month from 0.1% in November. On year, the underlying inflation data rose in line with estimates and the prior release of 2.8%.<\/p>\n <\/a><\/p>\n The Pound Sterling has held the key support of 1.2400 against the US Dollar since Monday. The near-term outlook for the\u00a0GBP\/USD pair\u00a0remains firm as\u00a0it holds the 20-day Exponential Moving Average (EMA), which trades around 1.2400. However, the 50-day EMA near 1.2510 remains a major barrier for the Sterling bulls.<\/p>\n The 14-day Relative Strength Index (RSI) oscillates in the 20.00-40.00 range, suggesting a sideways trend.<\/p>\n Looking down, the January 13 low of 1.2100 and the October 2023 low of 1.2050 will act as key support zones for the pair. On the upside, the December 30 high of 1.2607 will act as key resistance.<\/p>\n The Core Personal Consumption Expenditures (PCE), released by the US Bureau of Economic Analysis<\/a> on a monthly basis, measures the changes in the prices of goods and services purchased by consumers in the United States (US). The PCE Price Index is also the Federal Reserve\u2019s (Fed) preferred gauge of inflation. The YoY reading compares the prices of goods in the reference month to the same month a year earlier. The core reading excludes the so-called more volatile food and energy components to give a more accurate measurement of price pressures.” Generally, a high reading is bullish for the US Dollar (USD), while a low reading is bearish.<\/p>\nDaily digest market movers:\u00a0Pound Sterling remains under pressure on BoE dovish bets<\/h2>\n
\n
Technical Analysis: Pound Sterling holds ground above 20-day EMA<\/h2>\n
Economic Indicator<\/h2>\n
Core Personal Consumption Expenditures – Price Index (YoY)<\/h3>\n