Pound Surges as US-China Tariff Tensions Weaken Dollar

The Pound Sterling staged a robust recovery against the US Dollar on Thursday, climbing above 1.3300 with a 0.55% gain, as escalating US-China trade tensions rattled investor confidence in the Greenback. China’s demand for a complete rollback of tariffs met firm resistance from US officials, who dismissed unilateral concessions, deepening market uncertainty. This standoff fueled a broader sell-off of the US Dollar, with the US Dollar Index (DXY), which tracks the currency against a basket of peers, dropping 0.32% to 99.45 after peaking at 99.84.

The trade dispute’s ripple effects were amplified by cautious remarks from Federal Reserve officials. One Fed speaker indicated the central bank could adjust policy as early as June if economic data supports it but highlighted that uncertainty is hampering business planning. Another echoed this sentiment, noting that a weakening labor market could prompt rate cuts if unemployment rises. These data-dependent tones underscored the Fed’s careful navigation of an economy strained by trade and inflationary pressures, further denting the Dollar’s appeal.

Economic data added to the complex backdrop. US Durable Goods Orders surged from 0.9% to 9.2% in March, driven by aircraft bookings, while Initial Jobless Claims rose to 222,000 for the week ending April 19, aligning with expectations. However, Existing Home Sales slumped 5.9%, falling from 4.27 million to 4.02 million, weighed down by elevated borrowing costs. These mixed signals kept markets on edge, contributing to the Dollar’s struggles.

From a technical perspective, GBP/USD is poised for further gains but faces hurdles. A daily close above Wednesday’s high of 1.3338 could propel the pair toward 1.3350, with 1.3400 and the year-to-date peak of 1.3423 in sight. Conversely, failure to breach this level might trigger a pullback toward the 50-day Simple Moving Average at 1.3194. As trade tensions and economic data continue to shape market dynamics, the Pound’s upward momentum reflects a broader shift away from the embattled US Dollar.