The British pound started the day with light gains but has soared in the North American session. GBP/USD is currently trading at 1.2290, up 1.06% on the day. US financial markets are closed for Martin Luther King Day and Donald Trump will be inaugurated as US president later today.
Trump set to issue executive order but delay tariffs
Many investors expected a quiet day with US markets closed today for Martin Luther King Day. However, a report in today’s Wall Street Journal that incoming president Donald Trump would put his tariff plans on hold has sent the US dollar sharply lower against most of the major currencies, including the British pound.
Trump has promised to start his presidential term with a flurry of executive orders as early as today, including taking action against illegal immigration and delaying a ban on TikTok. There were fears that Trump would also slap tariffs on US trading partners on his first day in office. Still, it’s unlikely that Trump will retreat from his tariff pledge and we can expect volatility in the financial markets when he makes such an announcement.
The UK labor market has been strong despite weak growth and the UK releases employment data early on Tuesday. The market estimate for the three months to November stands at 35 thousand, after a strong gain of 173 thousand in the previous report. The unemployment rate is expected to remains at 4.3%. Average earnings including bonuses are projected to jump to 5.6%, compared to 5.2% in the previous release. If wages do rise sharply in tomorrow’s employment report, it will complicate the Bank of England’s efforts to contain inflation and could delay interest rate cuts.
GBP/USD Technical
GBP/USD has pushed past resistance at 1.2192 and is testing resistance at 1.2294 . The next resistance line is 1.2400
1.2076 and 1.1984 are the next support levels
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Kenny FisherMarket Analyst at OANDAA highly experienced financial market analyst with a focus on fundamental and macroeconomic analysis, Kenny Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in major online financial publications including Investing.com, Seeking Alpha and FXStreet.