Pound Gains As Dollar Reverse On Trump Trade Policy

Fundamental Analysis

* Wrong Footing: The pound sterling strengthened against the US dollar following new comments on tariffs by President Trump. On Monday, the US Dollar experienced a sharp correction, dropping over 1% on the index. This came after it was revealed that tariffs were not included in the executive orders signed by President Trump during his initial hours in office. Markets had misjudged the situation, believing the tariff stance had softened and would face significant delays. However, late Monday, President Trump clarified that a 25% tariff on imports from Canada and Mexico would take effect at the beginning of February, prompting swift market reactions.

Technical Analysis

*Technical Breakout: GBPUSD was traded higher following prior breakout above the previous resistance level 1.23100. MACD which illustrate bullish bias signal suggest the pair to likely extend its gains.

* Resistance and Support: If the bullish momentum persists, there’s a strong likelihood that the price will potentially head towards the level 1.25000. Conversely, a potential reversal is also to be expected and the price could head back towards 1.20950 after it breaks back below the level 1.23100.

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Potential Risks

Looking ahead, market attention is likely to continue to center on Donald Trump’s policy updates, as traders assess their potential impact on the U.S. economy and the dollar. On the economic front, the calendar is relatively light, but key U.S. data such as Initial Jobless Claims and S&P Global PMI figures will still draw focus.

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Monitoring

Stay updated on US data, Trump updates, global market updates, central bank updates and any shifts in the US Dollar’s strength by following PU Prime’s market insights and daily financial news.

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Disclaimer: Trading derivatives involves high risks, and market conditions can change rapidly. The content is for informational purposes only and should not be considered as financial advice. Traders should conduct their own research and consider risk management strategies.