GBP/USD rises to test new highs, absorbs Trump tariffs in stride

• GBP/USD briefly tested new six-month highs on Wednesday after tariff announcements.
• The Trump administration's tariffs came in at levels that investors found better than feared.
• Steep import taxes are still being imposed on US consumers, and economic data will become increasingly important.

GBP/USD stepped into fresh bids at six-month highs on Wednesday after the Trump administration unveiled tariffs that overall came in better than many investors had feared based on President Donald Trump's cavalcade of tariff threats since taking up residence in the White House 72 days ago. The exact details of the tariff proposals remain complex, but US consumers can expect to pay a flat 10% tariff on all imports into the US, alongside an additional 25% tariff on all automobiles and car parts, and varied "reciprocal" tariffs charged at different levels on a per-country basis. Donald Trump also took the opportunity to remind the world that he still intends to issue even further tariff packages on things like copper, microchips, and other basic imported consumer goods that underpin the entire US economy.

With tariffs set to jack up consumer prices in the coming months, and with a lack of a clear workaround for consumer markets to obtain foreign goods without paying steep import taxes, inflation pressures are likely to rise in the near-term and stay high for much longer than anybody wants. As noted by Federal Reserve (Fed) policymakers, uncertainty around the Trump administration's trade policies will likely keep interest rates higher for even longer than previously expected.

The release schedule on the UK side of the economic data docket remains light this week, but a fresh print of US Nonfarm Payrolls (NFP) labor figures are due later this week. This NFP release could be a major datapoint for markets as the US economy heads into a post-tariff economic environment, with March's labor data set to act as a "bellwether" for the impacts of the Trump team's tariff plans.

GBP/USD price forecast

GBP/USD is once again battling the 1.3000 handle as bids push into fresh six-month peaks. Cable has been riding a bullish trendline breakout since mid-January's swing low into 1.2100, and could be poised for an extended breakout if price action makes a clean push through 1.3000.

GBP/USD daily chart