GBP/USD appreciates as US Dollar weakens following updated Trump’s tariff rates.
The Trump administration announced new tariffs of up to 40% on 14 countries.
The Pound Sterling may face challenges amid escalating fiscal risks in United Kingdom.
GBP/USD edges higher after two days of losses, trading around 1.3630 during the Asian hours on Tuesday. The pair appreciates as the US Dollar (USD) loses ground as traders adopt caution after US President Donald Trump announced updated tariff rates on 14 countries that have yet to secure trade deals with Washington.
The Trump administration announced levies of 25% on goods from Japan and South Korea, with threatens to escalate tariffs if the two nations retaliate. The US also imposed 25% rates on Malaysia, Kazakhstan and Tunisia, while South Africa would see a 30% tariff and Laos and Myanmar would face a 40% levy. Other nations hit with levies included Indonesia with a 32% rate, Bangladesh with 35%, and Thailand and Cambodia with duties of 36%. President Trump has also signed an executive order delaying the implementation of new tariffs from July to August 1, giving negotiators more time to reach agreements, per Bloomberg.
Trump posted on social media on Monday that “Any Country aligning themselves with the Anti-American policies of BRICS, will be charged an ADDITIONAL 10% Tariff. There will be no exceptions to this policy.”
The GBP/USD pair faced challenges as the Pound Sterling (GBP) struggled amid escalating fiscal risks in United Kingdom (UK). The increase in the welfare spending bill by the administration has raised the likelihood of an announcement of a tax increase in the Autumn Budget. Chancellor Rachel Reeves indicated at possible tax hikes in the autumn budget to address a public finance gap.
Deutsche Bank’s Analysts indicated another 25 basis points interest-rate cut to 4% by the Bank of England (BoE) in August. The analysts also anticipated the central bank to deliver two more interest rate cuts in November and December.
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