• The Pound Sterling is rebounding against the US Dollar as sentiment switches for GBP’s transatlantic currency peer. 
• Weak UK data may limit the Pound’s gains, however, as data shows UK shoppers shy away from spending in November. 
• Technically, GBP/USD hangs onto its short-term uptrend but remains vulnerable to a reversal. 

The Pound Sterling (GBP) climbs back up to just shy of the 1.2700 mark on Tuesday as market sentiment switches against the US Dollar (USD). 

GBP/USD’s recovery comes after the pair suffered heavy losses on the previous day and declined by 0.71%. This followed tough talk from US President-elect Donald Trump in which he threatened to hit the BRICS trading bloc with 100% tariffs unless it gave up its search for an alternative to the US Dollar. Stronger-than-expected US Purchasing Manager Index (PMI) data further boosted the Buck.

However, it was comments from Federal Reserve (Fed) members, including Fed Governor Christopher Waller, that eventually capped the Greenback’s rally on Monday. 

Waller said he was leaning “toward supporting a cut in December.” This solidified bets for the Fed cutting interest rates by 25 basis points at its December policy meeting, with the CME FedWatch tool calculating a probability of 76% (from the mid 60s previously). Lower interest rates are negative for currencies as they reduce foreign capital inflows.