The British Pound (GBP) extended its advance against the U.S. Dollar (USD) in early Asian trade on Tuesday, with the GBP/USD pair hovering near 1.3370. The move comes as renewed concerns over the Federal Reserve’s independence and mounting fears of a U.S. economic slowdown continue to weigh heavily on the greenback.
U.S. President Donald Trump reignited market anxiety after publicly criticizing Fed Chair Jerome Powell for maintaining a cautious “wait and see” stance on monetary policy. In a post on Truth Social, Trump warned that unless Powell initiates immediate interest rate cuts, the U.S. economy could face a significant slowdown. This renewed pressure on the Fed has deepened investor unease, casting doubts on the central bank’s autonomy at a time of heightened economic uncertainty.
The U.S. Dollar Index (DXY), which tracks the greenback against a basket of six major currencies, slipped further to around 98.30—its lowest level since March 2022—reflecting widespread weakness in the USD. Trump’s unpredictable tariff policy and the escalating trade tensions between Washington and Beijing have only added to the market’s risk aversion, undermining the dollar’s appeal as a safe-haven asset.
Despite this USD softness, the British Pound’s upside may be capped in the near term. Softer-than-expected U.K. Consumer Price Index (CPI) inflation data for March and broader global economic concerns have strengthened expectations that the Bank of England (BoE) will cut interest rates at its May policy meeting. According to data from LSEG, markets are now pricing in an 86% probability of a rate cut, which could limit GBP gains against the USD.
Bullish Momentum Faces BoE Headwinds
While the immediate momentum favors the GBP/USD bulls amid a weaker U.S. Dollar, underlying expectations of BoE easing may temper further advances. Traders will be closely watching upcoming U.S. economic releases and central bank commentary, alongside U.K. inflation and employment data, for clearer direction.
For now, the pair remains buoyed by dollar weakness, but any signs of Fed resilience or unexpected hawkish signals from U.K. policymakers could shift sentiment quickly.
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