Pound Sterling trades calmly against US Dollar as investors await updates on US tariffs

• The Pound Sterling consolidates around 1.3470 against the US Dollar, while investors await updates on US trade talks.
• US President Trump considers a higher tariff baseline rate on imports from the EU.
• Investors eye the flash US S&P Global PMI data for July.

The Pound Sterling (GBP) trades broadly sideways against the US Dollar (USD) around 1.3470 during the European trading session on Tuesday. The GBP/USD pair ticks down slightly as the US Dollar gains ground after Monday's corrective move.

At the time of writing, the US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, finds cushion below 98.00. The DXY retraced from its four-week high near 99.00.

Investors brace for significant volatility in the US Dollar as United States (US) President Donald Trump's August 1 tariff deadline is approaching and Washington has closed deals with a handful of nations. Also, the US is not expected to reach bilateral deals with its trading partners in the remaining time.

So far, the US has announced trade deals with the United Kingdom (UK), Vietnam and Indonesia, and a limited pact with China. Washington has sent letters, establishing tariff rates, to 22 nations, notably Japan, Vietnam, Canada, Mexico and the European Union (EU).

On Monday, US Treasury Secretary Scott Bessent signaled that Washington is more emphasized on "quality" and not "timing" regarding negotiations. "The important thing here is the quality of the deal, not the timing of the deals," Bessent said in an interview with CNBC on Monday.

Meanwhile, fresh escalation in trade tensions between the US and the EU could weigh on the US Dollar. EU officials vow to retaliate against levies threatened by Trump. Over the weekend, a report from The Wall Street Journal (WSJ) signaled that the US president is considering a higher baseline tariff rate in a range between 15% and 20% from the 10% previously stated.

Daily digest market movers: Pound Sterling trades stably ahead of flash S&P Global UK PMI data

• The Pound Sterling demonstrates stability against its major peers on Tuesday, with investors awaiting preliminary United Kingdom (UK) S&P Global Purchasing Managers' Index (PMI) data for July, scheduled for release on Thursday.
• Investors will closely monitor the UK PMI data to get cues about whether the impact of a hiring slowdown has started flowing into the economy. The report is expected to show that the overall business activity grew moderately. The Composite PMI is expected to have dropped slightly to 51.9 from 52.0 in June.
• UK employers have restricted fresh hiring to offset increased employee costs, following the effectiveness of an acceleration in employers' contributions to social security schemes.
• Meanwhile, market expectations for the Bank of England's (BoE) interest rate decision in the monetary policy announcement next month will be a key trigger for the Pound Sterling. The BoE is almost certain to cut interest rates by 25 basis points (bps) to 4%.
• In Tuesday's session, investors will focus on BoE Governor Andrew Bailey's testimony on July's Financial Stability Report before the Treasury Select Committee at 09:15 GMT. Bailey is unlikely to provide guidance on the monetary policy outlook.
• In the US, traders have trimmed expectations for the Federal Reserve (Fed) to reduce interest rates in the September meeting.
• Traders pare Fed dovish bets after the release of the US Consumer Price Index (CPI) data for June last week, which showed that prices of products largely imported have increased after the imposition of sectoral tariffs by Donald Trump.

Technical Analysis: Pound Sterling wobbles below 1.3500

The Pound Sterling oscillates in the previous day's range around 1.3470 against the US Dollar on Tuesday. The near-term trend of the GBP/USD pair is bearish as it faces selling pressure after a recovery move near the 20-day Exponential Moving Average (EMA) around 1.3500

The 14-day Relative Strength Index (RSI) strives to hold above the 40.00 level. A fresh bearish momentum would emerge if the RSI falls below that level.

Looking down, the May 12 low of 1.3140 will act as a key support zone. On the upside, the July 11 high around 1.3585 will act as a key barrier.