- GBP/USD is declining as the US dollar rises amid growing risk sentiment.
- President Trump plans to implement a 50% tariff on imported copper and a 200% tariff on drug imports.
- The UK’s Office for Budget Responsibility has issued a warning regarding unsustainable public finances.
GBP/USD is likely to continue its downward trend, expected to trade around 1.3580 during Wednesday’s Asian session. This decline is linked to the strengthening US dollar, which is gaining traction amidst heightened risk aversion. During a recent White House Cabinet meeting, President Trump indicated intentions to introduce a 50% tariff on imported copper, although he has not specified when these tariffs will come into play.
His aim is to boost domestic copper production and lessen dependence on imports, as nearly half of the U.S. copper supply comes from Chile. These new tariffs, alongside existing tariffs on steel and aluminum, are likely to heighten trade tensions and create more volatility in the metal market.
Moreover, U.S. Treasury Secretary Scott Bescent mentioned that the U.S. has already collected around $100 billion in tariff revenue this year, with expectations to reach a total of $300 billion by the close of 2025, largely due to President Trump’s increasing trade actions.
The GBP/USD pair is encountering challenges as the Pound Sterling weakens, driven by concerns over the UK’s financial outlook. The Office for Budget Responsibility (OBR) warns that the public finances are on an unsustainable long-term path, exacerbated by rising costs associated with national pensions and the climate crisis.
Richard Hughes, Chair of the Budget Watchdog, highlighted that public debt might exceed 270% of GDP by the early 2070s, influenced by an aging population and surging healthcare and pension expenses. Additionally, global tensions and demands for higher defense spending have contributed to ongoing financial uncertainty.
