• Sun. Feb 16th, 2025

GBP/USD Drops Near 1.2300 as Traders Remain Cautious Ahead of Trump’s Economic Policies

GBP/USD

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  • The pound fell against the dollar following reports that President Trump will call on federal agencies to review tariff policy.
  • Investors fear Trump’s policies could lead to a financial meltdown, which could force the Fed to cut interest rates just once more.
  • Demand for UK bonds has increased after retail sales data for December came in weaker than expected.

The GBP/USD pair retreated to trade at 1.2300 on Asian exchanges on Tuesday after gaining more than 1% in the previous session. The dollar fell after falling in previous sessions as US President Donald Trump prepared to bring in federal agencies to oversee trade and assess relations between the US, Canada, Mexico and China.

The U.S. Dollar Index (DXY), which tracks the greenback against a basket of six major currencies, is currently trading at 108.30 after recent gains. The dollar was falling, with yields on the U.S. 2-year and 10-year Treasury notes hovering at lows of 4.23% and 4.54%, respectively, at the time of writing.

Investors expect the Federal Reserve to keep the current federal funds rate between 4.25% and 4.50% at its next meeting, according to the Chicago Mercantile Exchange’s (CME) FedWatch tool. However, investors predict that the Trump administration’s policies could disrupt financial markets and force the Fed to make just one more rate cut.

Sterling strengthened as demand for British government bonds increased after weaker-than-expected UK retail sales data for December came in. Monthly retail sales fell 0.3%, below expectations for a 0.4% increase and compared with expectations for a 0.1% increase in November.

UK retail sales data fell sharply, supporting the Bank of England’s (BoE) moderate expectations. Analysts at Oxford Economics predict that the Bank of England could cut interest rates by 100 basis points (bps) to 3.75% by the end of the year.

Today’s British Pound Price Update

The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the weakest against the Japanese Yen.

USD EUR GBP JPY CAD AUD NZD CHF
USD 0.25% 0.25% -0.33% 0.77% 0.40% 0.36% 0.05%
EUR -0.25% 0.00% -0.50% 0.52% 0.15% 0.11% -0.20%
GBP -0.25% -0.01% -0.57% 0.51% 0.14% 0.11% -0.20%
JPY 0.33% 0.50% 0.57% 1.08% 0.71% 0.66% 0.36%
CAD -0.77% -0.52% -0.51% -1.08% -0.36% -0.40% -0.71%
AUD -0.40% -0.15% -0.14% -0.71% 0.36% -0.04% -0.34%
NZD -0.36% -0.11% -0.11% -0.66% 0.40% 0.04% -0.31%
CHF -0.05% 0.20% 0.20% -0.36% 0.71% 0.34% 0.31%