Sterling falls ahead of US tariff ‘liberation day’

The Pound Sterling lost ground against the Dollar as US Liberation Day approaches on Wednesday, when President Donald Trump is expected to announce additional tariffs to the ones already enacted since March 2.

By late Monday, GBPUSD was trading at 1.2911, down 0.17%.

The escalation of the trade war has led investors to ditch riskier assets. Wall Street registered substantial losses on Monday, a reflection of a dismal market mood as US equities are set to finish their worst quarter compared to the rest of the world since the 1980s, according to Bloomberg.

In the meantime, Goldman Sachs revealed that the chances of a US recession increased from 20% to 35% due to a “deterioration in household and business confidence” and comments from Washington hinting they will tolerate a deeper economic slowdown in order to achieve their goals.

Data-wise, the UK economic docket is absent, while the Chicago PMI data for March rose by 47.6 points from 45.5 and exceeded forecasts of 45.4. Notably, it is the largest level since November 2023, yet it remains in contractionary territory for the sixteenth consecutive month.

Some of the subcomponents improved, like Production, New Orders, Employment, and Order Backlogs. Supplier Deliveries, Inventories, and Prices Paid dipped, according to the poll.

GBPUSD extended its mild fall as the DXY Dollar Index, which tracks the performance of a basket of six currencies, including the pound versus the greenback, rose 0.23% to 104.24.

This week, the UK economic docket will feature Housing Prices and Flash PMIs.

In the US, the ISM Manufacturing and Services PMI, along with Nonfarm Payrolls, would dictate the path of the GBPUSD pair.