GBP/USD falls near 1.2300 as investors caution over Trump’s economic policies

  • GBP/USD depreciates following news that President Trump intends to order federal agencies to review tariff policies.
  • Traders speculate that Trump’s policies could lead to inflationary pressures, possibly restricting the Fed to just one more rate cut.
  • Demand for UK bonds rose following weaker than expected retail sales data for December.

GBP/USD loses ground after posting more than 1% gains in the previous session, trading around 1.2300 during Asian hours on Tuesday. The pair faced challenges as the US Dollar (USD) regained ground after recent losses in the previous session, supported by the news that President Donald Trump intends to order federal agencies to review tariff policies and evaluate United States trade relations with Canada, Mexico and China.

The US Dollar Index (DXY), which tracks the performance of the US dollar against six major currencies, is trading around 108.30 after paring recent gains. The US Dollar receives downward pressure as the 2-year and 10-year US Treasury yields remain subdued at 4.23% and 4.54%, respectively, at the time of writing.

According to the CME’s FedWatch tool, traders anticipate that the US Federal Reserve (Fed) will keep interest rates within the current range of 4.25%-4.50% during the next three monetary policy meetings. However, investors speculate that policies under the Trump administration could trigger inflationary pressures, which could limit the Fed to just one additional rate cut.

The British Pound (GBP) strengthened as demand for United Kingdom (UK) bonds increased following weaker-than-expected UK retail sales data for December. Monthly retail sales contracted 0.3%, contrary to expectations of 0.4% growth, which was expected to follow the 0.1% increase in November.

The unexpected drop in UK retail sales has reinforced dovish expectations for the Bank of England (BoE). Analysts at Oxford Economics predict that the BoE could cut interest rates by 100 basis points (bps), taking them to 3.75% by the end of the year.

Pound Sterling PRICE Today

The table below shows the percentage change of the British Pound (GBP) against major currencies today. Pound sterling was the weakest currency against the Japanese yen.

USD EUR GBP JPY CAD AUD NZD CHF
USD 0.25% 0.25% -0.33% 0.77% 0.40% 0.36% 0.05%
EUR -0.25% 0.00% -0.50% 0.52% 0.15% 0.11% -0.20%
GBP -0.25% -0.01% -0.57% 0.51% 0.14% 0.11% -0.20%
JPY 0.33% 0.50% 0.57% 1.08% 0.71% 0.66% 0.36%
CAD -0.77% -0.52% -0.51% -1.08% -0.36% -0.40% -0.71%
AUD -0.40% -0.15% -0.14% -0.71% 0.36% -0.04% -0.34%
NZD -0.36% -0.11% -0.11% -0.66% 0.40% 0.04% -0.31%
CHF -0.05% 0.20% 0.20% -0.36% 0.71% 0.34% 0.31%

The heat map shows percentage changes for major currencies. The base currency is selected from the left column, while the quote currency is selected from the top row. For example, if you choose the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change shown in the box will represent the GBP (base)/USD (quote).

Source: Fx Street

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