GBP/USD attracts some buyers to near 1.2950 as traders await US PMI release

GBP/USD gathers strength to near 1.2940 in Monday’s early European session, up 0.16% on the day. 

Next round of Trump’s tariffs is due on April 2, when the White House will announce reciprocal levies on many countries.

BoE’s Bailey said policymakers still believed rates were on a gradually declining path.

The GBP/USD pair attracts some buyers to around 1.2940 during the early European session on Monday, bolstered by the softer Greenback. The uncertainty about US President Donald Trump's next round of tariffs and concerns over the US economic slowdown weigh on the US Dollar (USD) against the Pound Sterling (GBP).  The preliminary reading of the US S&P Global Manufacturing Purchasing Managers Index (PMI) for March will take center stage later on Monday. 

The Greenback remains under pressure as analysts believe Trump’s aggressive and erratic trade policies could trigger a recession. Trump has declared April 2 to be "Liberation Day" for the US, when he will implement so-called reciprocal tariffs that seek to equalize US tariffs with those charged by trading partners, as well as tariffs on sectors such as automobiles, pharmaceuticals, and semiconductors, which he has repeatedly stated would be enacted on that day.

The Bank of England (BoE) left interest rates unchanged on Thursday, keeping the benchmark rate at 4.5%. The decision had been widely anticipated by markets. BoE Governor Andrew Bailey said there is a lot of uncertainty at the moment, but he said rate-setters still believed rates were “on a gradually declining path.” Looking further ahead, we continue to expect 100 bps of BoE cuts for a terminal rate of 3.5% by early 2026,” noted Nomura Bank analysts George Buckley and Andrzej Szczepaniak. 

However, the gloomy UK economic picture, along with increased global policy uncertainty and weak confidence, might undermine the GBP.  The UK economy remains in the “wait-and-see mode” as it expects the upcoming budget from Chancellor Rachel Reeves and contends with the growing risks from US trade policies. Investors will closely monitor the UK Consumer Price Index (CPI) inflation data for February for fresh impetus, which will be released later on Wednesday.