Global Markets React to Fed Outlook, Trump-Xi Meeting and UK Political Risks

The US dollar maintained its upward momentum across the currency markets, driven by expectations that the Federal Reserve will likely keep interest rates elevated for an extended period. Investors are increasingly positioning for a more hawkish policy outlook, which continues to support the greenback against major currencies.

Market participants are also closely following US President Donald Trump’s visit to China. Any signs of improving diplomatic or trade relations between Washington and Beijing could slightly reduce risk aversion in global markets and soften demand for the dollar.

In the UK, the British pound remains in focus after stronger-than-expected GDP figures boosted confidence in the economy. However, political uncertainty surrounding UK Prime Minister Keir Starmer continues to cloud sentiment, with growing political pressure potentially limiting sterling’s upside potential.

US equity markets pushed higher once again as optimism surrounding US-China trade discussions improved overall market sentiment. Still, expectations for tighter Federal Reserve policy capped some of the gains. Investors are also weighing reports involving Kevin Warsh as a possible candidate for future Fed leadership, adding another layer of uncertainty to monetary policy expectations.

Oil prices lost some momentum, slipping modestly during recent trading sessions. Traders continue to balance several competing themes, including geopolitical tensions involving Iran, developments from the Trump-Xi meeting, and ongoing supply tightness in the US crude market. With multiple catalysts influencing sentiment, volatility in the energy market could remain elevated.

Gold prices extended their decline as the stronger US dollar continued to pressure the precious metal. The market’s focus remains on the negative correlation between gold and the dollar, meaning additional USD strength may keep gold under bearish pressure in the short term.

On the macroeconomic front, traders are watching UK GDP data, US weekly jobless claims, and April retail sales figures for fresh direction. Attention will also turn to speeches from key policymakers including Christine Lagarde, Jeff Schmid, Huw Pill, and Beth Hammack.

Technically, GBP/USD remains trapped within a consolidation range between 1.3590 resistance and 1.3385 support. Momentum indicators continue to suggest indecision, with the RSI hovering around neutral levels while Bollinger Bands narrow further. A breakout above resistance could trigger a move toward 1.3790, while a break below support may shift focus toward the 1.3175 region.

Meanwhile, the Nasdaq continued its recovery trend and is now approaching the key 30,000 resistance zone. The broader bullish structure remains intact as long as the index holds above its rising trendline from late March, although overbought conditions suggest the risk of a short-term pullback is increasing.

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