- GBP/USD strengthens to near 1.3520 in Monday’s Asian session.
- Confusion surrounds US trade policy, weighing on the US Dollar.
- UK Retail Sales in January beat forecasts.
The GBP/USD pair gains traction to around 1.3520 during the early Asian session on Monday. The US Dollar (USD) faces some selling pressure against the Cable as tariff uncertainty lingers. Traders will take more cues from the US Producer Price Index (PPI) report for January, which will be published later on Friday.
The US Supreme Court struck down Trump’s tariffs as illegal and exceeding his authority on Friday. Trump has responded by lashing out at the court and imposing a blanket 15% levy on imports. Reuters stated that Trump’s replacement tariffs run for 150 days, and it is not clear if the US owes importers refunds on duties already paid, with the Supreme Court making no ruling on that issue.
“It weakens the dollar in the sense that it potentially benefits non-U.S. growth,” said Sim Moh Siong, currency strategist at OCBC Bank in Singapore.
The stronger-than-expected UK economic data provide some support to the Pound Sterling (GBP) against the Greenback. The UK Retail Sales jumped 1.8% MoM in January, versus a rise of 0.4% prior, according to the Office for National Statistics (ONS) on Friday. This figure came in above the market consensus of an increase of 0.2%. On an annual basis, Retail Sales climbed 4.5% in January compared to a rise of 1.9% prior (revised from 2.5%), better than the estimation of a rise of 2.8%.
The attention will shift to the US January PPI report on Friday. The headline and core PPI are expected to show a rise of 0.3% in January. Any signs of hotter inflation in the US could lift the USD and create a headwind for the major pair in the near term.
