The GBP/USD pair traded lower around 1.3435 early Thursday in European hours, pressured by a firmer US Dollar following a US federal court’s decision to block President Donald Trump’s sweeping “Liberation Day” tariffs. Market focus shifts to the upcoming US first-quarter GDP preliminary reading, scheduled later in the day.
The Federal Open Market Committee’s (FOMC) May meeting summary highlighted increased uncertainty surrounding the US economic outlook. Fed officials acknowledged complications in achieving their dual mandate of full employment and low inflation, citing ongoing policy unpredictability. As a result, the Fed signaled its intention to maintain interest rates at current levels for the foreseeable future amid a clouded economic environment.
The court ruling early Thursday clarified that the emergency powers invoked by the White House do not authorize unilateral imposition of broad tariffs on imports from nearly every country. This legal setback for Trump’s tariff plans has supported the US Dollar while weighing on the GBP/USD pair.
On the UK side, persistent food inflation, rising for the fourth straight month, reduces the likelihood of further Bank of England (BoE) rate cuts. Barclays analysts have revised their outlook, pushing back expected BoE rate reductions to February 2026, rather than the end of this year. This less dovish stance from the UK central bank could help cap Sterling’s losses in the near term.
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