GBPUSD:
The GBP/USD pair has remained steady after losses in the previous session, trading near 1.2440 during Asian hours on Wednesday. The pair’s decline could be attributed to increased risk aversion due to US President Donald Trump’s tariff threats.On Monday evening, President Trump announced plans to impose tariffs on imports of computer chips, pharmaceuticals, steel, aluminium and copper. The objective of these tariffs is to encourage production to be relocated to the United States and to support domestic manufacturing.Additionally, GBP/USD may continue to decline as the US Dollar benefits from the Federal Reserve’s (Fed) cautious stance on Wednesday’s upcoming policy decision.According to the CME’s FedWatch tool, market expectations indicate near 100 per cent confidence that the Fed will maintain the rate within the target range of 4.25-4.50 per cent. However, traders will be watching the press conference of Fed Chairman Jerome Powell closely for any indication on the future direction of monetary policy.The Pound Sterling (GBP) remains under pressure amid growing concerns over the risk of stagflation in the UK economy caused by weakening labour demand and persistent inflation. Market forecasts indicate a 25 basis points (bps) rate cut as part of the Bank of England’s (BoE) initial monetary policy decision in 2025 on 6 February, which would result in borrowing rates dropping to 4.5% within a context of a sluggish economic outlook.
Despite UK Prime Minister Keir Starmer’s optimistic comments on the economy during an interview with Bloomberg on Tuesday, the British pound is trading with caution. Starmer emphasised that the Labour government’s primary focus is on promoting economic growth and noted a positive shift in the economy’s trajectory. He also highlighted the robust trade relations between the United States and the United Kingdom, underscoring the potential for further strengthening these ties.
Trading recommendation: Trading mainly by Sell orders from the current price level.
Origin: FreshForex
