The British pound edged higher against the U.S. dollar on Tuesday, with the GBP/USD pair climbing above 1.3250 as renewed global trade tensions spurred demand for traditional safe havens and weighed on the greenback.
Concerns over the future of trade relations between major economies, particularly the U.S. and China, have resurfaced following a series of comments from officials suggesting negotiations may face fresh roadblocks. In response, investors have shifted away from the U.S. dollar, which has weakened broadly, offering tailwinds for sterling.
Despite persistent uncertainty over the UK’s domestic economic outlook and monetary policy path, the pound found support from broader market sentiment. The Bank of England has maintained a cautious stance, with traders watching upcoming inflation and labor market data for further clarity on the timing of potential rate adjustments.
While the rise above 1.3250 marks the highest level in several weeks, analysts warn that sterling’s gains may remain fragile, especially if the trade narrative worsens or U.S. macro data surprises to the upside. The currency’s next major hurdle could be determined by both geopolitical developments and central bank communication in the coming days.
Market participants are also keeping a close eye on BoE commentary ahead of the next policy meeting, as well as any signals from the U.S. Federal Reserve regarding rate expectations, which could further shape the trajectory of the pair.
