The GBP/USD pair continued its downward trajectory during Wednesday’s Asian session, hovering around the 1.3300 mark after retreating from a seven-month high of 1.3424 hit in the previous session. This decline was driven by a shift in investor preference toward US assets, including the US Dollar (USD), following a more optimistic outlook from US President Donald Trump.
Trump helped ease market concerns by expressing his support for Federal Reserve Chair Jerome Powell, dismissing rumors of a potential firing. He clarified, “The press runs away with things. No, I have no intention of firing him. I would like to see him be a little more active in terms of his idea to lower interest rates.”
Investor sentiment was further buoyed by remarks from US Treasury Secretary Scott Bessent, who described the ongoing trade conflict with China as “unsustainable” and expressed confidence in a resolution. While formal negotiations have yet to commence, Bessent suggested that a trade deal could be within reach soon, offering additional optimism for markets.
Trump also reinforced this optimism, emphasizing progress in trade talks with China and dismissing fears of substantial tariff hikes. He clarified that tariffs would not rise to 145%, although existing tariffs would remain in place for the time being.
In contrast, the British Pound (GBP) faced mounting pressure as investors turned cautious over the Bank of England’s (BoE) future monetary policy. Growing concerns about the impact of US-driven trade tensions have led to speculation that the BoE may opt for an interest rate cut at its May meeting in response to ongoing global economic uncertainty.
Further complicating matters, the UK’s trade relations with the US have been strained by reciprocal tariffs imposed by the Trump administration. These include a 10% tariff on certain UK goods and 25% levies on steel and foreign cars, adding to the bearish sentiment surrounding the GBP despite the possibility of a future trade agreement.
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