- GBP/USD softens around 1.3345 in Monday’s early Asian session.
- Trump threatened to impose fresh tariffs on China.
- Traders brace for the BoE’s Mann speech later on Monday ahead of UK employment data.
The GBP/USD pair trades on a softer note near 1.3345 during the early Asian session on Monday. The US Dollar (USD) strengthens against the Pound Sterling (GBP) despite US President Donald Trump’s tariff threat on China. The Bank of England (BoE) external member Catherine Mann is set to speak later on Monday. The US market is closed on Monday for the US Columbus Day.
Trump on Friday had threatened 100% tariffs on China from November 1. On Sunday, Beijing defended its curbs on exports of rare earth elements and equipment as a response to US aggression but stopped short of imposing new levies on US products. Economic uncertainty and escalating trade tensions between the world’s two largest economies could undermine the Greenback and create a tailwind for the major pair.
“However, the recent policy moves suggest a wider range of outcomes than was the case ahead of prior U.S.-China talks, with the possibility of greater concessions but also a risk of substantial new export restrictions and higher tariffs, at least temporarily,” said Jan Hatzius, chief economist at Goldman Sachs.
The upside for the major pair might be limited as traders expect the UK Chancellor of the Exchequer Rachel Reeves to raise taxes in the Autumn Statement again to address its ballooning fiscal debt, which is scheduled for late November. The announcement of fresh taxes could dampen the overall sentiment of households.
Looking ahead, the UK employment data for the three months ending in August will be in the spotlight later on Tuesday. Any signs of weakening in the UK labor market could exert some selling pressure on the Cable in the near term.
