- The new tariff cycle under Trump seems to be weighing down GBP/USD’s performance.
- Trump has postponed the July 9 tariff deadline to August 1, insisting that no further delays will occur.
- Investors are predominantly anticipating future delays on tariffs.
GBP/USD is grappling with challenges as it hovers around 1.3600. The market is responding to the mixed signals regarding President Donald Trump’s tariff policies. Initially announced in early April, these tariffs were set to go into effect but have now been postponed from July 9 to August 1, with the President stating that there will be no more extensions.
Adding to the complexity, Trump has revealed a new 50% tariff on all copper imports into the U.S. He also reiterated previously discussed higher tariffs on various goods, including a 25% tax on imports from South Korea and Japan. Still, it remains somewhat unclear how the administration plans to shift the financial burden onto foreign nations while American consumers and importers typically foot the bill for these tariffs.
This week, the economic calendar appears sparse, leaving investors to contend with the ongoing trade war and the uncertainty emanating from the Trump administration. Although there’s some immediate bearish sentiment, many investors seem to be clinging to the hope that the Trump team might re-evaluate these tariffs. Promised transformative trade deals have yet to manifest, leading to skepticism about whether the anticipated changes will yield significant results.
GBP/USD Price Overview
The GBP/USD pair continues to struggle after retreating from a multi-year high of around 1.3800 earlier in July, with a noticeable downward trend. Despite this, it remains above the 50-day exponential moving average (EMA) of roughly 1.3470. While the technical indicators suggest some easing from prior overbought conditions, there’s still potential for further downward movement.
GBP/USD Daily Chart
Pound Sterling FAQ
Pound Sterling (GBP), established in 886 AD, is recognized as the world’s oldest currency and serves as the official currency of Britain. In 2022, it ranked as the fourth most traded currency globally, making up 12% of daily forex transactions, with a typical trading volume of $630 billion. The GBP/USD pair, often referred to as “cable,” holds a significant share of 11% in FX trading.
The principal factor influencing the sterling’s value is the monetary policy set by the Bank of England (BOE). This policy aims for “price stability,” usually targeting an inflation rate around 2%. To achieve this, the BOE adjusts interest rates: higher rates can curb inflation while lower rates may stimulate economic growth.
Economic indicators themselves often impact the pound’s value. Metrics like GDP, manufacturing PMI, and employment figures can dictate GBP trends. A robust economy is typically beneficial for the currency, attracting investment and possibly leading to increased interest rates. Conversely, weak economic data can lead to depreciation.
Moreover, the trade balance is a crucial economic measure for the Pound Sterling. This figure captures the difference between a nation’s export earnings and import expenditures. A positive trade balance, driven by strong export demand, tends to uplift the currency’s value, while a negative balance could have the opposite effect.
