The GBP/USD pair soared past 1.3400 during Monday’s European trading session, marking its highest level in seven months. The British Pound found solid support as the US Dollar (USD) weakened sharply following renewed threats to the Federal Reserve’s (Fed) independence, triggered by comments from US President Donald Trump.
The US Dollar Index (DXY), which measures the greenback against six major currencies, plunged over 1% to hit a fresh three-year low around 98.00.
President Trump criticized Fed Chair Jerome Powell for maintaining a cautious “wait and see” approach toward monetary policy, awaiting more clarity on the economic impact of new tariffs. Trump made it clear he was dissatisfied with Powell’s stance and hinted at the possibility of removing him.
“The Fed really owes it to the American people to get interest rates down. That’s the only thing he’s good for,” Trump said Friday. “If I want him out of there, he’ll be out real fast, believe me.”
Meanwhile, ongoing trade tensions — despite Trump’s announcement of a 90-day delay on imposing reciprocal tariffs — continue to pressure the US Dollar. Global economic uncertainty remains elevated, further weighing on sentiment.
In the UK, weaker-than-expected Consumer Price Index (CPI) data for March, combined with the broader global slowdown, has increased expectations for a potential interest rate cut by the Bank of England (BoE) at its May policy meeting. A rate cut could put additional pressure on the Pound in the near term.
The BoE’s Financial Policy Committee (FPC) warned this month that significant shifts in “global trading arrangements” could threaten “financial stability by depressing growth.”
Looking ahead, investors are closely watching key UK economic releases this week, including preliminary S&P Global/CIPS Purchasing Managers’ Index (PMI) figures for April and March Retail Sales data, due Wednesday and Friday, respectively.
