Pound Sterling Rebounds as Trump Reignites US-China Trade Tensions

Pound Sterling Rebounds as Trump Reignites Trade Dispute with China

GBP/USD Climbs to 1.3500 as Market Mood Shifts

The Pound Sterling (GBP) regained ground on Friday, climbing to the 1.3500 level against the US Dollar (USD) during the North American session. This rebound follows renewed US-China trade tensions, which undermined early USD strength and shifted sentiment in favor of the British Pound.

Trump Accuses China of Violating Trade Agreement

In a Truth Social post, US President Donald Trump accused China of breaching a prior trade deal, stating:

"The bad news is that China, not surprisingly to many, has totally broken its agreement with us."

The market reacted swiftly, with demand for the US Dollar fading as investor anxiety over global trade returned.

Legal Rulings Add to Market Uncertainty

Earlier, a US federal appeals court temporarily halted a lower court’s ruling that invalidated many of Trump's tariffs. The reversal injected further uncertainty into the markets, with investors concerned about the economic fallout from renewed tariffs and trade wars.

On Wednesday, a US trade court ruled against the tariffs, calling them an abuse of the International Emergency Economic Powers Act (IEEPA). The court cited Trump’s bypassing of Congress and declared several tariffs illegal, demanding their removal within 10 days.

Inflation Data Offers Mild USD Support

Meanwhile, the US PCE inflation report for April revealed a 0.1% monthly rise, while the core rate came in at 2.5% YoY, in line with expectations. Despite the stable inflation reading, the US Dollar Index (DXY) fell back to 99.40, giving room for GBP/USD recovery.

Outlook: GBP/USD May Stay Supported If Dollar Weakness Persists

As geopolitical tensions escalate and markets price in Fed rate cuts, the Pound Sterling may remain resilient. Continued uncertainty around tariffs and trade agreements could cap the US Dollar’s gains, supporting further upside in GBP/USD.

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