The GBP/USD pair saw an increase near 1.3520 during early Asian trading on Monday. Meanwhile, the US dollar is under some selling pressure, partly due to ongoing uncertainty surrounding tariffs. Traders are looking forward to the U.S. Producer Price Index (PPI) report set for release on Friday, which may provide more insights.
On Friday, the U.S. Supreme Court determined that President Trump’s tariffs were unlawful and overstepped his authority. In response, Trump criticized the ruling and announced a flat 15% tariff on imported goods. Reports suggest these replacement tariffs are set to last for 150 days, but it’s unclear if importers will need to refund any tariffs previously paid, as the Supreme Court has yet to make a decision on that matter.
According to Sim Moe Siong, a currency strategist at OCBC Bank in Singapore, “A weaker dollar could create growth opportunities outside the U.S.”
Positive economic data from the UK will likely bolster the British pound against the US dollar. In January, UK retail sales surged by 1.8% month-on-month, outpacing a mere 0.4% increase in the previous month, according to the Office for National Statistics (ONS). This figure also exceeded the market expectation of a 0.2% rise. On an annual basis, retail sales jumped by 4.5%, a notable increase compared to the previously revised 1.9%.
Attention is now shifting to the forthcoming U.S. January PPI report. Expectations are for the headline and core PPI to rise by 0.3%. Any signs of continued inflation in the U.S. may lead to a stronger dollar, posing a short-term challenge for major currency pairs.
