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GBP/USD falls to near 1.2300 as traders adopt caution ahead of Trump’s economic policies

James Carter
James Carter

James Carter

James is a seasoned forex trader and financial analyst with...

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James Carter

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The GBP/USD pair slipped closer to 1.2300, pressured by cautious sentiment as traders brace for clarity on Donald Trump’s economic policies. The uncertainty surrounding potential trade agreements and fiscal reforms has heightened risk aversion, keeping the British pound under pressure against a resilient U.S. dollar.

Investors remain wary of Trump’s potential impact on global trade and currency markets, particularly as the Federal Reserve continues its path of monetary tightening. Expectations of higher U.S. interest rates have supported the dollar, while the pound faces additional headwinds from lingering concerns over post-Brexit negotiations and the UK’s economic outlook.

GPB/USD Price Against Major Currencies as of January 21st, 2025 (Source: FXStreet)

Market participants are now focused on Trump’s upcoming statements for insights into his fiscal and trade policies. Any hawkish tone or indications of aggressive reforms could further bolster the dollar, intensifying the downward trend for GBP/USD. However, a lack of concrete policy details could provide some relief for the pound in the short term.

While the pair hovers near key support levels, its trajectory will likely depend on broader market sentiment and the interplay between U.S. policy announcements and UK economic developments. Until clearer signals emerge, traders are expected to maintain a cautious stance.

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