Pound Sterling Strengthens Against US Dollar Amid Moody's Downgrade

GBP/USD Rises as US Dollar Struggles After Moody's Downgrade and Geopolitical Tensions

The Pound Sterling (GBP) continues to appreciate against the US Dollar (USD), rising to around 1.3380 in European trading on Tuesday. This marks a second consecutive day of gains for the GBP/USD pair, with the US Dollar remaining weak following Moody’s recent downgrade of the US sovereign credit rating from Aaa to Aa1. The downgrade, which reflects concerns over the US government's rising $36 trillion debt, initially triggered a spike in US Treasury yields. However, yields have since moderated.

In addition, tensions between the US and China have exacerbated the pressure on the USD, as China accused the US of undermining trade talks. This follows recent warnings from the US Commerce Department about Chinese technology companies, including Huawei, leading to further geopolitical strain. These combined factors have kept the US Dollar on the back foot, allowing the Pound to gain ground.