In the early weeks of President Trump's tenure, his administration's trade policies continue to reverberate globally, with the European Union potentially on the horizon as the next target for tariffs. While Trump's approach to international trade remains assertive, his leverage over China may be waning compared to the first trade war. These developments coincide with notable movements in currency markets, where the GBP/USD pair saw a pause after a three-day rise, trading around 1.2490 during Asian hours on Thursday.
The currency market's volatility is set against a backdrop of expectations that the Bank of England might soon resume its policy-easing cycle. Market analysts anticipate a potential interest rate reduction by 25 basis points to 4.5%, which could exert downward pressure on the Pound Sterling. Meanwhile, in the precious metals market, gold prices have held steady, maintaining a position just below the record high reached on Wednesday, driven by falling US bond yields and speculation surrounding Federal Reserve rate cuts.
The geopolitical climate, particularly US-China trade tensions, has heightened demand for safe-haven assets, including the XAU/USD pair. With gold historically seen as a safe-haven investment, its stability amid economic uncertainty highlights its appeal. The precious metal's resilience is further bolstered by its role in portfolios seeking refuge from market volatility.
It is important to note that neither the author nor FXStreet are registered investment advisors, and this article is not intended to offer investment advice. Investors should carefully consider their financial situations and consult with professionals before making investment decisions.