The global financial landscape witnessed notable shifts on Tuesday as Ripple's XRP surged by 30% amid a broader cryptocurrency market recovery. Meanwhile, the US economic data painted an upbeat picture, signaling potential support for the Greenback. However, the spotlight remained on impending tariffs with China, set to be implemented on the same day, which could impact the GBP/USD currency pair. Additionally, the Bank of England is expected to initiate a policy-easing cycle later this week, likely cutting interest rates by 25 basis points.
The United States' economic indicators exhibit resilience, with the ISM Manufacturing PMI rising to 50.9 in January from 49.3 in December. This improvement suggests a strengthening manufacturing sector, potentially bolstering the US dollar. In contrast, the GBP/USD pair faces pressure due to looming tariffs on China, set at a 10% across-the-board rate. The Bank of England's anticipated interest rate cut on Thursday could further influence the currency pair's movement.
Ripple's XRP showed significant momentum in the early hours of Tuesday, climbing 30% as investors sought recovery from the recent downturn in the cryptocurrency market. This bullish trend reflects a growing optimism among market participants, despite recent volatility.
China is bracing for a new wave of tariffs imposed by the United States, with a 10% tariff taking effect on Tuesday. This development could have far-reaching implications for global trade dynamics and currency markets. The GBP/USD pair, in particular, may experience downward pressure as investors react to these changes.
In response to economic conditions and global trade developments, the Bank of England is expected to take decisive action. The Monetary Policy Committee is anticipated to vote 8-1 in favor of reducing interest rates by 25 basis points to 4.5% during its meeting on Thursday. This move aims to stimulate economic growth amid ongoing uncertainties.
US President Donald Trump affirmed that discussions with China are imminent, stating that talks would occur "probably over the next 24 hours." His administration's approach to trade negotiations remains a critical factor in shaping market sentiment.
"If we can’t make a deal with China, then the tariffs will be very, very substantial." – Donald Trump
In 2024, Mexico, China, and Canada accounted for a significant portion—42%—of total US imports. Recently, President Trump suspended steep tariffs on Mexico and Canada after their leaders agreed to deploy 10,000 soldiers to the US border to combat drug trafficking. This decision marks a temporary respite from trade tensions and highlights ongoing diplomatic efforts.
Market participants are closely monitoring US labor data and speeches by Federal Reserve policymakers amid President Trump's tariff decisions. These factors could influence short-term market dynamics and investor sentiment.
In the Asian trading session on Tuesday, the AUD/USD pair paused its rebound and dropped further to test 0.6200. Meanwhile, gold prices entered a consolidative mode above $2,800, slightly below Monday's all-time highs of $2,831.
The USD/JPY pair experienced a rebound but remained below 155.50 during Tuesday's Asian session. Market participants continue to assess the impact of global economic developments on currency movements.