GBP/USD slips below 1.3500 as market stays cautious before August 1 tariff deadline
The British Pound (GBP) lost ground on Monday, dropping just below the 1.3500 level after gaining more than 0.5% the previous day. This decline in GBP/USD comes as traders grow nervous about the upcoming August 1 tariff deadline set by the U.S. If no trade agreement is reached by then, new tariffs are expected to take effect, which is shaking investor confidence.
U.S. Commerce Secretary confirmed that the August 1 deadline will not be extended, although trade talks could continue after that date. At the same time, tension is rising around the Federal Reserve’s independence, with the U.S. Treasury Secretary suggesting a deeper look into the Fed’s recent actions.
In the UK, attention is turning to important economic data, especially Thursday’s PMI report. Forecasts show a possible recovery in manufacturing and strong growth in the services sector. Meanwhile, the Bank of England (BoE) is considering slowing down or pausing its long-term bond sales, as demand from pension funds and other buyers seems to be falling.
Traders are also watching the outlook for interest rate cuts. While two rate cuts are still expected in 2025, the chances have slightly decreased.
Impact:
GBP/USD might remain weak if trade fears grow. Positive UK data could help the Pound recover slightly, but BoE bond policy changes could affect investor mood.