On Thursday, the British Pound (GBP) showed signs of recovery as it bounced back from earlier losses against the US Dollar (USD) and reached the important level of 1.3500 during North American trading hours. This occurred as the US Dollar gave up a significant portion of its initial gains, following the United States (US) Court of International Trade’s decision against President Donald Trump’s tariffs, which has added to economic uncertainty.
This event is also crucial for business owners who are currently developing their procurement strategies and considering Trump’s tariffs to be the new standard in the global economy. The US Dollar Index (DXY), which measures the value of the Greenback against six major currencies, declined to around 99.70, after reaching 100.50 earlier in the day.
Earlier in the day, the US Dollar (USD), bond yields, and US equities experienced sharp increases after the court in Manhattan blocked Donald Trump from imposing most of his tariffs. The court condemned the use of the Carter-era International Emergency Economic Powers Act (IEEPA) by Trump to justify his international agenda, calling it an abuse of presidential authority. The court also rejected the import duties that were announced by Trump on “Liberation Day”, although specific tariffs for sectors such as automobiles, metals, and semiconductors remain in place.
In the meantime, the court has given the administration a 10-day deadline to impose a permanent injunction on the Liberation Day tariffs, which the White House has appealed soon after the decision was made. During North American trading hours, White House Economic Advisor Kevin Hassett expressed confidence that the ruling to block Trump’s tariffs would be overturned. “I am confident that the appeal of the tariff ruling will be successful,” Hassett said. He clarified that trade negotiations are still ongoing and that three deals have been reached.
The British Pound bounced back against the US Dollar on Thursday, after finding support near a horizontal level from the high of September 26 at 1.3434, and is currently trading close to 1.3500. The outlook for the pair remains positive, with the 20-day Exponential Moving Average (EMA) sloping upwards near 1.3385. However, the 14-day Relative Strength Index (RSI) is struggling to stay above the 60.00 level. If the RSI drops into the 40.00-60.00 range, it could signal a decline in bullish momentum.
On the upside, the key resistance level for the pair is at the high of January 13, 2022, at 1.3750. On the downside, the 20-day EMA will provide strong support.