- Trump plans new tariffs as the British pound remains stable against the dollar around 1.3600.
- He is set to announce tariff increases affecting over seven countries, including taxes on copper and pharmaceuticals.
- The increase in UK gold yields could pose economic threats in the long run.
The pound sterling (GBP) is trading cautiously around 1.3600 against the US dollar during European trading hours on Wednesday. This stability follows President Trump’s announcement of new tariffs on Tuesday.
As of this writing, the US Dollar Index (DXY), which measures the dollar’s value against six major currencies, is steady at 97.50, having reached a weekly high of 97.80.
During a cabinet meeting on Tuesday, Trump mentioned a potential 50% tariff on copper imports, aiming to enhance domestic production, although no timeline was provided. This stands as the fourth category of products targeted by his tariff policy, following automobiles, steel, and aluminum.
In addition to copper tariffs, Trump has also signaled an additional 10% tariff on BRICS nations and a staggering 200% tax on drug imports for the upcoming year.
Daily Market Insight: Pound Sterling Steady Amid Rising Gold Yields
- On Wednesday, the pound is trading smoothly with its major peers. The UK currency has stabilized following a notable drop last week and the sale of UK gilt securities, prompting Prime Minister Rachel Reeves to relax fiscal rules to support significant reforms in the Welfare Expense Bill.
- UK gilt yields improved after Reeves announced an increase in the standard universal credit allowance without specifying funding sources, potentially adding £4.8 billion to government expenses by the end of the 2029-2030 fiscal year.
- Increasing gold yields pose a challenge for the government’s financial obligations. Reports indicate that the UK now faces the third-highest borrowing costs among developed nations, with a 10-year gilt yield near 4.63%.
- From an economic standpoint, investors should pay attention to the forthcoming GDP and factory data for May, which will be released on Friday.
- Additionally, Trump’s upcoming letters to over seven countries are on investors’ radar. These letters are expected to detail customs fees after failing to finalize a trade deal during a 90-day suspension. “Tomorrow morning, we will announce at least seven countries related to trade, with more to follow in the afternoon,” Trump noted on Truth.Social. However, the impact of these letters might be limited as the mutual tariff imposition date has been pushed to August 1.
- During the North American session, market watchers will also be focused on the release of the Federal Open Market Committee (FOMC) minutes from the July 17-18 policy meeting.
Technical Analysis: Pound Sterling Steady Below 1.3600
The pound is expected to trade within a limited range around 1.3600 against the dollar on Wednesday. The GBP/USD pair seems to fluctuate near its 20-day exponential moving average (EMA) of roughly 1.3590, highlighting short-term uncertainty.
The 14-day relative strength index (RSI) is hovering close to 50.00, suggesting a weakening bullish trend.
Looking downward, the psychological level of 1.3500 acts as a vital support zone, while around 1.3800 has proved to be a significant hurdle for the past three and a half years.
