GBP/USD held onto modest gains on Friday, trading around 1.3148—up 0.10%—after dipping earlier to 1.3095. With no major UK data scheduled and the US government shutdown persisting, both markets have been left to parse limited economic signals.
Sterling edges higher as dollar consolidates; weak US sentiment and Fed caution temper optimism
The US dollar recovered some losses this week but still looks set to finish roughly 0.27% lower on the US Dollar Index (DXY), which tracks the greenback against six major currencies. The DXY currently stands at 99.45 after peaking at 100.36, a six-month high.
Fed Vice Chair Philip Jefferson on Friday urged a cautious, meeting-by-meeting approach to any future rate cuts as policy nears a neutral stance, warning that the shutdown’s data gaps complicate decision-making.
Meanwhile, the University of Michigan’s November Consumer Sentiment index plunged to 50.3 from October’s 53.6 reading, with the report noting that households are increasingly concerned about the shutdown’s economic fallout. One-year inflation expectations ticked up to 4.7% from 4.6%, while the five-year outlook eased to 3.6% from 3.9%.
White House economic adviser Kevin Hassett told CNN the shutdown is inflicting more damage than anticipated, projecting a 1–1.5% drag on GDP growth this quarter.
Technical outlook: Downtrend intact despite small recovery
On the daily chart, GBP/USD shows the beginnings of a rebound but remains in a broader downtrend after sliding below the 200-day simple moving average (SMA) at 1.3261. The Relative Strength Index (RSI) indicates growing bullish momentum, but buyers must break above 1.3200 and recapture the 200-day SMA to shift the technical bias higher. To the downside, a move below this week’s low near 1.3020 could open the door to a test of the 1.3000 level.
