GBP/USD price steady above $1.29 as markets brace for Trump tariff reveal
GBP/USD trades flat near 1.2915 as markets await key tariff decision and U.S. data
The British pound is trading in a tight range near 1.2915 against the U.S. Dollar on Wednesday as investors remain cautious ahead of President Donald Trump’s anticipated announcement of reciprocal tariffs. The announcement, expected later today, has kept markets on edge, especially with reports indicating that the UK may not secure an exemption from the measures.
This comes after the pair staged a mild rebound from its recent low of 1.2870 but failed to extend the momentum meaningfully. While traders digest the broader implications of a potential global trade war, near-term price action remains subdued, reflecting indecision. The GBP/USD pair is caught between downward pressure from the trade policy risk and supportive tailwinds stemming from diverging central bank expectations.
GBP/USD price movement (February 2025 - April 2025) Source: TradingView.
Rate policy divergence lends support to the pound
Expectations that the Federal Reserve will resume rate cuts this year continue to weigh on the U.S. Dollar, especially after Tuesday’s ISM manufacturing PMI revealed the first contraction in three months, falling below the 50.0 threshold. Meanwhile, investors believe the Bank of England will be slower to ease, particularly after February inflation data aligned with the BoE’s outlook and growth projections were revised down.
However, concerns remain. British Finance Minister Rachel Reeves recently stated that inflation is expected to average 3.2% in 2025, up from October’s 2.6% forecast, while growth expectations for 2025 were cut to 1%. These fiscal headwinds may limit the pound's upside, especially if Trump’s tariffs worsen the UK’s trade outlook.
Market awaits direction from key U.S. data and Trump’s decision
In the absence of significant UK data releases today, attention turns to the U.S. ADP employment report and Factory Orders. Traders will also closely watch President Trump’s tariff announcement for its global scope and tone, which could determine the next directional bias for GBP/USD.
In earlier updates, we noted that GBP/USD's outlook remains data- and sentiment-sensitive, with Fed rate cut bets and BoE caution providing partial support. This dynamic continues to shape the pair’s movement as traders await clarity from Trump’s upcoming trade policy actions.
