- GBP/USD edged higher after US President Donald Trump signaled a willingness to engage in trade negotiations.
- US Customs and Border Protection confirmed plans to start collecting country-specific tariffs from 86 trade partners.
- The British Pound found support from stronger as the 10-year gilt yield rose to around 4.61%.
The GBP/USD pair advances for a second straight session, trading near 1.2820 during Asian hours on Wednesday. The pair’s uptick is supported by easing trade tensions after US President Donald Trump signaled openness to negotiations with global partners, fueling hopes of a potential de-escalation in trade conflicts.
US Customs and Border Protection confirmed on Tuesday that it is prepared to begin collecting country-specific tariffs from 86 trade partners. While President Trump maintained his broader tariff plans despite requests for exemptions, he indicated a willingness to engage in discussions.
Chicago Fed President Austan Goolsbee emphasized a data-driven approach to monetary policy decisions. According to the CME FedWatch Tool, markets are increasingly pricing in a 25-basis-point rate cut as early as May, though a July cut remains the base case. Traders anticipate over 100 basis points in rate reductions by year-end.
The Pound Sterling (GBP) also drew support from rising UK gilt yields, with the 10-year yield climbing to around 4.61% at the time of writing. Investors grew cautiously optimistic that some US tariffs may be negotiated, following comments from Treasury Secretary Scott Bessent that around 70 countries—including Japan—have approached Washington for talks.
The UK economy may weather the impact better than others, given its relatively modest 10% tariff exposure. UK firms could benefit if US buyers seek alternative suppliers to avoid elevated costs. The UK government estimates the direct GDP impact will be under 0.1%.
Meanwhile, expectations for Bank of England (BoE) rate cuts are rising. Following the tariff developments, markets are fully pricing in a May rate cut—up from 50% prior—and foresee three cuts by the end of 2025.
