GBP/USD Exchange Rate Slides as Tariffs Spark New Trade Tensions
The Pound Sterling to US Dollar (GBP/USD) exchange rate is sliding this morning as renewed trade uncertainty caused markets to flock to safe-haven currencies.
At the time of writing the GBP/USD exchange rate is down 0.3%, taking the pairing back below $1.29.
US Dollar (USD) Exchange Rates Climb as US-China Trade Tensions Escalate
The US Dollar (USD) is pressing higher against the Pound (GBP) and most of its other peers this morning, with investors flocking to the safe-haven currency as the US and China exchange new tit-for-tat tariffs.
The move was initiated by the US who imposed tariffs on another $16bn worth of Chinese goods, resulting in China matching it by levying its own retaliatory tariffs on US goods.
While this latest round of tariffs have been planned for some time, they coincide with low-level talks between the two sides.
This has seen the US Dollar recoup some of its recent losses as investors fear this could undermine attempts to resolve the trade dispute.
David Madden, market analyst at CMC Markets UK, said:
‘The US-China trade spat continues as representatives from both countries engage in low level talks in the US.
‘The tit-for-tat tariffs conflict continues as both sides will impose tariffs on $16 billion worth of each other’s goods today. The monetary size is small but the gesture is big, and traders will be eyeing developments.’
However, slightly tempering the US Dollar’s gains this morning are the latest minutes from the Federal Reserve.
Published late on Wednesday, the minutes reveal that the Fed is still keen on raising interest rates but suggested that rates are reaching neutral levels, while also flagging the downside risks posed by the current trade uncertainty.
Pound Sterling (GBP) Stems Losses Thanks to Cautious Brexit Optimism
While the Pound (GBP) is trending lower against the US Dollar (USD) this morning, it is performing more robustly against its other peers thanks to some ‘highly conditional’ Brexit optimism.
This comes as Brexit Secretary Dominic Raab expressed confidence this week that the UK and EU could reach a deal in time for the next EU summit in October.
This flies in the face of recent pessimism that the UK was hurtling towards a no-deal Brexit, much to the relief of GBP investors.
GBP/USD Exchange Rate Forecast: Will Contraction in US Goods Orders Prompt the US Dollar to Retreat?
Looking ahead to the end of the week’s session, the Pound US Dollar (GBP/USD) exchange rate could find itself ticking higher again following the release of the latest US Durable Goods Orders.
Markets are bracing for a possible dip in USD on Friday as the figures are forecast to reveal that goods orders contracted again last month.
Meanwhile the Pound may look to tick higher tomorrow morning should UK mortgage approvals be shown to have continued to rise in July.