- GBP/USD moves little as traders remain cautious amid increasing uncertainty surrounding Trump’s plans for tariffs.
- Trump said that he will begin sending letters on trade tariffs to other countries starting Friday.
- BoE’s Bailey noted that interest rates should be lowered gradually, as inflationary pressures appear to be easing.
GBP/USD holds ground for the second consecutive day, trading around 1.3660 during the Asian hours on Friday. The pair remains steady as the US Dollar (USD) depreciates as traders adopt caution, while seeking clarity on US President Donald Trump’s plans for tariffs on various countries. On Thursday, Trump told reporters that he “will begin sending letters on trade tariffs starting Friday.” He added that he would send letters to 10 countries at a time, laying out tariff rates of 20% to 30%, reported by Reuters.
The GBP/USD pair maintains its position as the Pound Sterling (GBP) receives support after Prime Minister (PM) Keir Starmer’s defense of Chancellor Rachel Reeves. PM Starmer affirmed that she would remain in her role of chancellor “for a very long time to come.” This helped ease market concerns that a potential replacement might adopt a looser fiscal stance with increased borrowing.
The Bank of England (BoE) is expected to deliver an interest rate cut in August, taking the central bank’s base rate to 4%, following dovish remarks from officials. BoE Governor Andrew Bailey told CNBC on Tuesday that interest rates should come down gradually as inflationary pressures appear to be easing.
Meanwhile, BoE policymaker Alan Taylor spoke at the European Central Bank (ECB) Forum on Central Banking, in Sintra, on Wednesday, saying that I don’t think bigger cuts are necessarily needed or desirable. Everything has to be taken into consideration; we are not on a preset path on rates, Taylor added.
