GBP/USD Rebounds As Trade Concerns Weigh On Greenback
GBP/USD surged on Monday, kicking off the June trading window by climbing back above 1.3550 after a broad-based greenback weakness. Trade frictions continue to weigh on the US dollar, with cable traders leaning bullish ahead of the Bank of England’s (BoE) latest Monetary Policy Report hearing before the UK parliament on Tuesday.
The Trump administration was hit with another round of trade headlines on Monday; Donald Trump announced late last week that he intends to double tariffs on all steel imported into the US to 50% starting next week. President Trump announced the new trade move during a speech at a United Auto Workers union rally last Friday. China has responded to the Trump administration’s accusations that it is violating initial trade terms reached in a temporary meeting between the two countries in Switzerland in May.
Donald Trump expressed frustration over China’s slow approval of rare earth exports destined for the US; China hit back earlier this week, saying it was operating within the original timeframe agreed in Switzerland, and retaliating that the US was actually the one breaking trade terms by imposing new restrictions on technology exports that specifically target China. Despite Trump’s staff consistently claiming that talks are underway, tensions between the US and China appear to be escalating.
The BoE has remained increasingly cautious about the potential impact of US tariffs. The BoE’s latest Monetary Policy Statement, due to be delivered to the UK parliament on Tuesday, is expected to reinforce the rhetoric on keeping interest rates on hold from policymakers. The pound was strongly bid through the first and second quarters after the BoE changed its stance to deliver far fewer rate cuts this year than many market participants had initially expected.
Source: FXStreet
