GBP/USD rallies on dovish Fed commentary and ceasefire expectations

[Redator]

GBP/USD is rallying today, currently up 0.70% in the New York session.

Trading around ~1.36200, cable is on pace for its best two-day performance since mid-April, owing to further dollar downside.

GBP/USD: Key takeaways from today’s session

• A fall in safe-haven demand, mainly due to expectations of a ceasefire between Israel and Iran, has opened the door to further dollar weakness, with the DXY down 0.46% in today’s session
  

• Otherwise, dovish commentary from Fed policymakers, suggesting that a July rate cut remains a possibility, has also hurt dollar pricing

GBP/USD: Expectations of an Israel-Iran ceasefire weaken dollar demand

While many woke up this morning to news of a ceasefire in the Middle East, orchestrated at least in part by President Trump, at least one outcome has been renewed dollar weakness.

Suffering from weakening safe-haven demand on easing tensions, the greenback now looks set to slide lower, continuing its downtrend from highs made in early February. The same can be observed across other typical safe-haven assets, with the Japanese yen, Swiss franc, and gold all under pressure in today’s session.

Compared to the US dollar, sterling is positioned as a ‘riskier’ currency and is currently benefiting from a short-term ‘risk-on’ rally. Otherwise, more macro themes such as tariff-disruption and uncertainty on radical economic changes, mainly courtesy of Trump’s ‘Big Beautiful Bill’, continue to weigh negatively on the greenback.

GBP/USD: Fed policymaker commentary suggests July rate cuts are possible

While both the Bank of England and the Federal Reserve agreed to maintain rates in their June decisions, recent commentary from policymakers would suggest that the Federal Reserve could consider a rate cut in July, against broader market expectations.

Until this point, the Bank of England appeared the more dovish of the two, voting to maintain rates at a majority vote of 6-3 in their June decision. In a vacuum, this suggests that some members of the MPC are already in favour of cutting rates, unlike the Fed, which unanimously voted to keep rates unchanged.

This was the assumption until recent commentary from Federal Reserve policymakers surprised markets, revealing that both Michelle Bowman and Christopher Waller seem to, at least in part, support the notion of rate cuts in the upcoming July decision.

In one way or another, both governors seem to be increasingly less concerned about inflation, with Bowman reportedly shifting focus to the labour market instead.

"Should inflation pressures remain contained, I would support lowering the policy rate as soon as our next meeting in order to bring it closer to its neutral setting and to sustain a healthy labor market"

Federal Reserve Governor Michelle Bowman speaking in Prague

Previously, most expected the Federal Reserve’s first rate cut of 2025 to be in September.

Generally speaking, a more dovish stance bodes negatively for dollar pricing, especially with the interest rate differential between the Bank of England and the Federal Reserve only ~0.25% apart.

CME FedWatch, CME Group 24/06/2024

GBP/USD technical analysis

• Having found support at around 1.34003, GBP/USD is currently rallying and on pace to reach 40-month highs in the next few days of trading
• Bulls will likely target ~1.36809, then ~1.37822 should upside continue. Immediate support can be found at ~1.35745

GBP/USD, OANDA, TradingView, 24/06/2025

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