GBP/USD is trading around 1.3570, staying above 1.3550 and getting closer to its previous high of 1.3593, which is the highest in 39 months. This rise is due to the US Dollar weakening as concerns grow about the US’s debt situation. Tensions between the US and the EU have eased, boosting market confidence. The US President has postponed tariff impositions on the EU until July 9. Earlier, there were threats of high tariffs on European imports, but the recent news has helped stabilize the USD.

Market Movements Observation

The improved risk appetite has helped support the US Dollar Index near 99.00 after reaching a four-week low. Meanwhile, GBP/USD pulled back slightly due to thin trading volumes during a US holiday. Market reactions are focused on upcoming US data and the Senate’s tax legislation debate, which will affect GBP/USD trading. Both GBP and USD are set to respond to changes in trade relations and economic data. The pound is performing well around 1.3570, close to the peak of 1.3593. The dollar has weakened, mainly due to concerns about the US’s borrowing capabilities, leading to shifts in market positions as some traders predict more significant impacts on yield frameworks and short-term spreads.

Domestic and Global Influences

Washington’s attitude towards Europe has changed, at least for now. The decision to delay new tariffs until early July has calmed the markets. The previous proposal for steep tariffs on European goods had created anxiety, but with that risk set aside, the demand for moderate exposure has increased. The dollar index showed some strength as it rebounded off the 99.00 mark, but this recovery lacked excitement, especially with low trading activity during a US holiday. In these quieter times, price movements tend to be limited, but they also provide insights. The pullback in GBP/USD wasn’t significant, but it served as a reminder that higher levels can quickly reverse when liquidity is low. The direction of the market may depend on upcoming US economic data, particularly on inflation and employment, which could shift expectations for policy changes. Additionally, Senate discussions about potential tax code changes introduce a domestic risk, causing caution among macro traders. As a result, there’s been a shift in forward-rate pricing and demand for dollar hedges, especially for one to three-month periods. Shorter-term volatility is slightly higher, suggesting there may be sharp movements once the busy calendar clears. For those monitoring options flows, next week looks to be more active. With GBP/USD just below multi-year highs, traders with positions above 1.35 will be looking for signals from US fiscal developments and the Bank of England’s broader strategies. For now, currency traders see the pound’s strength as dependent on data rather than sustainable. Movements against other currencies, especially the euro, will also affect trading decisions as traders look for differing monetary guidance for the third quarter. As risk tolerance remains solid, the pair may rise further, but responses will be sensitive to updates from policymakers and upcoming economic events. Traders should prepare for sudden changes if the data surprises or sentiment shifts. The current situation offers both opportunities and the need for focused execution. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now