Pound to Dollar Rate: GBP Fluctuates vs USD on Trump’s Tariff Plans

November 27, 2024 - Written by David Woodsmith

STORY LINK Pound to Dollar Rate: GBP Fluctuates vs USD on Trump’s Tariff Plans

The Pound to US Dollar (GBP/USD) exchange rate saw choppy trading on Tuesday as markets reacted to Donald Trump’s announcement of sweeping new tariffs.

The US Dollar (USD) initially surged during the Asian session on Tuesday following a statement by President-elect Donald Trump, who revealed plans to introduce tariffs on imports from China, Mexico, and Canada on his first day in office.

This announcement sparked market turbulence, with investors flocking to the safe-haven US Dollar amid fears that the tariffs could disrupt global trade and slow economic growth.

However, the ‘Greenback’ subsequently relinquished some of its earlier gains as the European session got underway, with USD investors adopting a cautious approach ahead of the release of minutes from the Federal Reserve’s latest policy meeting.

Traders are divided on the likelihood of another Fed rate cut next month and are looking to the minutes for additional clarity.

Although the Pound (GBP) managed to edge higher against the US Dollar on Tuesday morning, it struggled to replicate this success against other major currencies.

This was due to lingering doubts about the strength of the UK economy, with recent data suggesting that economic growth is losing momentum.

The pessimistic outlook follows last week’s disappointing UK PMIs, which revealed that private sector activity in November contracted for the first time in a year, further dampening investor sentiment toward Sterling.

Looking ahead, the GBP/USD exchange rate could face renewed pressure mid-week with the release of the US core PCE price index.

As the Fed’s preferred measure of inflation, an uptick in the index may reduce expectations for a December rate cut, providing support for the US Dollar.

Additionally, the release of the latest US GDP figures could influence USD performance. Should the third-quarter growth estimate be revised higher, it may reinforce gains for the ‘Greenback’.

In contrast, the UK economic calendar remains sparse through the second half of the week, leaving the Pound more vulnerable to global market trends.

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TAGS: Pound Dollar Forecasts