GBP/USD drifts higher to around 1.2965 in Monday’s Asian session, adding 0.21% on the day.
The fears of economic slowdown in the US drag the US Dollar lower.
UK Retail Sales climbed unexpectedly in February.
The GBP/USD pair gathers strength to near 1.2965 during the Asian trading hours on Monday. The concerns that US President Donald Trump's tariffs will ignite inflation and dampen economic growth weigh on the US Dollar (USD) and act as a tailwind for the major pair.
Last week, Trump announced a 25% tariff on imported cars and light trucks set to take effect on April 3. This measure comes on top of a flat 25% tariff on steel and aluminum, and Trump's impending reciprocal tariff announcement on Wednesday. Many analysts are worried that tariffs will have a negative impact on the US economy, even while limiting the Federal Reserve's (Fed) chance for reducing interest rates while also increasing inflation in the near term. This, in turn, might drag the USD lower and lift the GBP/USD pair in the near term.
"Recession risks have become elevated – to a 40% probability – on concerns that aggressive U.S. policies hit business and household sentiment," warned Bruce Kasman, chief economist at JPMorgan.
UK data showed Retail Sales were surprisingly strong in February, supporting the Pound Sterling (GBP). The UK Retail Sales rose 1.0% MoM in February versus 1.4% prior (revised from 1.7%), the Office for National Statistics showed on Friday. This figure came in stronger than the estimation of a 0.3% decline. “The better news on retail sales in Q1 provides a glimmer of hope that that might be changing,” said Ruth Gregory, economist at the consultancy Capital Economics.
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