The Pound Sterling (GBP) advanced against the US Dollar (USD) on Wednesday, rising 0.60% to trade around 1.3396 during the North American session, as comments from US Treasury Secretary Scott Bessent eased tensions between the United States and China. The rebound follows a dip to 1.3309 earlier in the day.
Bessent hints at easing US-China trade tensions
Sterling gained traction after Bessent suggested that Washington could extend its pause on new tariffs against Chinese goods if Beijing agrees to relax its recently tightened restrictions on rare-earth exports.
“Is it possible that we could go to a longer roll in return? Perhaps. But all that’s going to be negotiated in the coming weeks,” Bessent said during a press conference in Washington. His remarks offered relief to risk sentiment and weakened demand for the safe-haven US Dollar.
Powell’s dovish tone weighs on the Dollar
Federal Reserve (Fed) Chair Jerome Powell’s latest comments reinforced expectations of further policy easing, adding pressure on the Greenback. Powell acknowledged growing labor market weakness and said the central bank should steer policy toward more “neutral” levels.
The dovish shift, coupled with the prolonged US government shutdown and rising unemployment risks, has weighed on market confidence. Investors now await the release of the Fed’s Beige Book for insights into the economic impact of these developments.
Bailey highlights UK labor market slowdown
In the UK, Bank of England (BoE) Governor Andrew Bailey echoed similar concerns, stating that the latest soft employment data support his view of a weakening labor market. Meanwhile, attention turns to the Autumn Budget, where Chancellor Rachel Reeves is expected to confirm a mix of tax increases and spending cuts as part of efforts to restore fiscal balance.
GBP/USD outlook remains cautiously bearish
While GBP/USD has climbed toward 1.34, analysts warn that the move may prove short-lived unless buyers secure a sustained break above 1.3400. A clear close above this level could open the door for a test of the 20-day simple moving average (SMA) at 1.3424, followed by the 50-day SMA at 1.3474.
However, the broader technical outlook remains bearish, with the Relative Strength Index (RSI) still below the 50-neutral threshold. On the downside, a drop below the October 14 swing low of 1.3248 could expose further losses toward the 200-day SMA at 1.3183.
