GBP/USD exceeds 1,3400: Trump’s threat to the fed weakens the dollar

By Canuto

The GBP/USD torque shot at its maximum in seven months, exceeding 1,3400, after statements by US President Donald Trump who calls into question the independence of the Federal Reserve and weakens the dollar. The financial markets react to Trump’s threat to remove the president of the FED, Jerome Powell, and the persistent global commercial tension, generating volatility in the key currencies and renewed expectations on features of fees in the United Kingdom.
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• The sterling pound exceeded 1,3400 against the dollar, marking its highest level in seven months.
• Donald Trump publicly criticized Jerome Powell and threatened his dismissal, which negatively hit the US dollar.
• The expectations of feat cuts in the United Kingdom and new key economic data maintain the attention of investors this week.

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The sterling pound reaches new maximums compared to pressure on the US dollar

On Monday, the price of the GBP/USD pair surprised the markets by reaching levels not seen in seven months, exceeding the threshold of 1,3400. The progress of the sterling pound coincided with a context of high tensions around the US monetary policy, generated by statements by President Donald Trump, who questioned the independence of the Federal Reserve (Fed) and reaffirmed his discontent with his holder, Jerome Powell.

The so -called ‘cable’, as is known to the currency pair, was mainly strengthened by the fall of the US dollar index (DXY). This indicator, which reflects the value of the dollar against six large currencies, decreased more than 1%, placing about 98.00 points and marking a minimum of three years according to data collected by FXSTERET. This dollar setback provided immediate support to the pound and other strong currencies.

Global investors performed Trump’s threats to dismiss Powell as an institutional risk signal, increasing volatility and the search for refuge in other currencies. This reaction was reinforced by the perception that US monetary policy could be influenced by political interests, far from the traditional technocratic approach of Fed.

Context: Trump, the Federal Reserve and the US dollar

To understand the market reaction, it is crucial to deepen the role and importance of the Federal Reserve for the United States Economy and the International Financial System. The US dollar (USD) is the most operated currency in the world, used as a global reference and value reserve since the mid -twentieth century. Its credibility and strength have historically depended on both the macroeconomic health of the US and the independence of the Fed.

This week, FXSTERET reported that President Trump criticized Jerome Powell for maintaining a position of “waiting and seeing” before modifying interest rates, demanding immediate cuts as an economic stimulus. Trump declared: “Fed really owes the American people to lower interest rates. That’s the only thing for what is good. I’m not happy with him. If I want him to come out, he will come out very fast, believe me.”

The perception that the Federal Reserve could lose its autonomy against the Executive Power caused an accelerated liquidation of dollars in international markets. In addition, the context of commercial tension, mainly between the United States and China, contributed to keeping USD under pressure, despite the announcement of a 90 -day break in the imposition of reciprocal tariffs.

Perspectives for sterling pound and the Bank of England

While the US dollar weakened, the sterling pound found support in the limited improvement of the British economic context, although with reserves. Although the United Kingdom’s consumer price index (CPI) showed moderate data for March, the persistence of global risks – including the commercial war and uncertainty about the world economy – opens space to speculate with a rate cut by the Bank of England (BOE) during its next monetary policy meeting.

The BOE financial policy committee warned this month that relevant changes in international trade agreements could negatively impact British financial stability, cooling growth. This factor introduces a caution note: a possible reduction of rates could limit the impulse of the pound in the short term despite the weakness of the dollar.

For the next few days, the markets of the market will be placed in the publication of advanced data of the Purchasing Management Index (PMI) S & P Global/Cips of the month of April – clash to anticipate the dynamics of the British private sector – and in the March retail sales figures. Both reports will be decisive to calibrate the real state of the economy in the United Kingdom and the future decisions of the BOE.

Dollar, monetary policy and global risks

As detailed in the information collected by FXSTERET, the US dollar remains vulnerable to the signals of political instability and the perception that the White House could intervene the decisions of the Fed to obtain rapid stimuli before the elections. The weakening of the dollar was accompanied by increases in the price of gold, which reached a new historical record above USD $ 3,400, and the euro, which is maintained above 1,1500 with its best result since November 2021.

The international context remains dominated by uncertainty, both in terms of American internal policy and global commercial relations. Although recent episodes show renewed volatility in the currency market, specialists recommend caution and exhaustive analysis before taking investment positions.

The attention of traders and analysts will be focused on the next economic reports, the comments of members of the FED and the BOE, as well as in any novelty regarding the commercial conflict between large economies. The evolution of these factors will define the course of the main currencies in the coming weeks.

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