Pound Sterling Drops Below 1.3600 Ahead of Looming US Tariff Deadline

Pound Sterling Slides Against US Dollar Ahead of US Tariff Deadline

GBP/USD Weakens as Investors Await Trade Announcements

The British Pound (GBP) continued its decline against the US Dollar (USD) in early European trading on Monday, dropping below the psychological level of 1.3600, now hovering near 1.3580. The weakness in GBP/USD is driven by investor caution ahead of the July 9 US tariff deadline, which could bring major trade-related developments.

The US Dollar Index (DXY) rose 0.35% to 97.45, reflecting broad-based USD strength as markets price in hawkish Federal Reserve (Fed) expectations and wait for progress on US trade deals.

Washington Signals Imminent Trade Announcements

US Treasury Secretary Scott Bessent hinted during a CNN interview that the Biden administration will issue multiple announcements regarding trade agreements within the next two days. He noted that "a lot of dragging of feet" from international partners was slowing the process, but reassured markets that Washington will “work very hard over the next 72 hours.”

Thus far, the US has concluded bilateral deals with the UK and Vietnam, along with a partial deal with China. A long-anticipated trade agreement with India remains uncertain despite optimism expressed on July 2.

UK Fiscal Worries Add to GBP Weakness

In addition to trade uncertainty, UK domestic factors are also pressuring the Pound. Rising welfare spending obligations could force the UK government to choose between higher taxes or future spending cuts, casting doubts over the country’s fiscal stability and further weighing on GBP sentiment.

Key Takeaways:

• GBP/USD trades around 1.3580 amid tariff-related uncertainty
• DXY strength reflects rising US Dollar momentum
• Traders eye upcoming US trade deal announcements
• UK fiscal pressures add to Sterling downside

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