Pound Sterling Gains Ground Against US Dollar as Tariff Uncertainty Weighs on Greenback

Pound Sterling Gains Ground Against US Dollar as Tariff Uncertainty Weighs on Greenback

GBP/USD Climbs Despite Weak UK Economic Data

The Pound Sterling (GBP) is pushing higher against the US Dollar (USD), reaching close to 1.3600 in Thursday’s European session. This comes despite weaker-than-expected UK GDP figures for April, which showed the economy contracting more than anticipated.

Slower Growth May Push BoE Toward Rate Cuts

The poor economic data has led to speculation that the Bank of England (BoE) could adopt a more dovish stance, potentially cutting interest rates further to support the economy. Softening labor demand and declining output are reinforcing expectations of policy easing.

US Dollar Slumps on Trade Policy Doubts

Meanwhile, the US Dollar Index (DXY) fell to a new three-year low near 97.80, pressured by growing uncertainty surrounding President Donald Trump’s tariff policy. Despite earlier positive trade talk headlines, Trump confirmed that the US will continue importing rare earth elements from China, raising questions about the broader trade strategy.

Market Implications

The GBP/USD rally appears more reflective of USD weakness than of GBP strength. Ongoing trade policy confusion and mixed economic data from both sides of the Atlantic will likely keep the pair volatile in the near term.

Related Reads on Tredu:

• US Dollar Index Hits Multi-Year Low: What’s Next?
• UK GDP Surprise: What It Means for BoE Policy Outlook
• Trump's Tariff Moves: Winners, Losers, and Market Reactions