Pound Slips Amid Risk-Off Sentiment and US-EU Trade Deal Concerns

The British pound faced modest losses on Tuesday, caught in the crosshairs of a resurgent US dollar and a broader shift in investor sentiment. Despite hopes for a boost from a newly announced US-EU trade agreement, the currency struggled as markets turned cautious, favoring safe-haven assets over riskier ones like the pound. This risk-off mood, coupled with uncertainties surrounding the trade deal, kept the pound under pressure, highlighting its vulnerability in a volatile global market.

The GBP/USD pair closed nearly unchanged, settling at 1.3348 compared to the previous day’s close of 1.3353. Throughout the trading session, the pair fluctuated, reaching a daily high of 1.3363 before dipping to a low of 1.3307. The dollar’s strength, bolstered by its ability to capitalize on the US-EU trade talks, weighed on the pound, which is often seen as a barometer of risk appetite in financial markets.

Investor concerns emerged following the announcement of the US-EU trade deal, with fears that the agreement might disproportionately favor the US at Europe’s expense. Ongoing negotiations and unresolved terms have fueled skepticism, raising the possibility of obstacles that could derail the deal’s completion. This uncertainty has further dampened enthusiasm for risk-sensitive currencies like the pound, as traders remain wary of potential setbacks.

As markets navigate these developments, the pound’s near-term outlook hinges on both global risk sentiment and the progress of the US-EU trade talks. With negotiations still in flux, the currency faces a delicate balancing act, caught between geopolitical uncertainties and the dollar’s persistent strength. Investors will be closely monitoring upcoming developments to gauge whether the pound can regain its footing or face further challenges in the days ahead.