As a result, the GBP/USD exchange rate has plummeted. It dropped towards the 1.3600 level during the Asian trading hours on Monday. The pair has broken under its nine-day Exponential Moving Average (EMA), indicating a bearish trend. Hence losses persist for the second day in a row. As of writing, GBP/USD is hovering at 1.3620 on the back of extreme markets last week and extreme in the UK.
Recent volatility in the GBP/USD exchange rate results from multiple factors. Most importantly, perhaps, have been the comments of U.S. Treasury Secretary Bessent. In a statement, Bessent suggested that this move by former President Donald Trump was to send warning letters to chosen trading partners. As stated in these letters, doing so would risk increasing tariffs to levels previously in effect on April 2. If we don’t come to an agreement before August 1, those hikes will be implemented. This announcement has introduced further uncertainty into the trading climate which has shifted currency rates.
Despite this recent downturn, a look at the daily chart through the lens of technical analysis shows GBP/USD still in the bounds of an overall ascending channel pattern. Real estate analysts point out that this would be a positive sign of the potential for real recovery in the short term. Traders are still coming into GBP/USD net-long. Nevertheless, they maintain a positive outlook on the pair, even after the recent bullish price action.
As the market persists to respond to these geopolitical influences and ongoing trade talks, the trader is advised to stay alert. The continued drama over tariffs and administration policy toward China and other international trade negotiations could put even more pressure on currency values in future sessions.