ExchangeRates.org.uk - The US Dollar (USD) was muted on Tuesday morning, having relinquished some of the gains it enjoyed during the Asian trading session.
USD exchange rates raced higher overnight on Monday following a social media post from US President-elect Donald Trump, in which he claimed he will impose tariffs on China, Mexico and Canada on his first day immediately following his inauguration next year.
The post triggered a flight to safety from investors who fear the move could severely impact global growth.
However, by the start of the European session, the US Dollar had relinquished a good portion of these losses, with USD investors appearing to turn cautious ahead of the publication of the minutes from the Federal Reserve’s latest policy meeting.
Analysts are currently split on whether the US central bank will cut rates again next month and will look to the minutes for greater guidance.
While it ticked higher against the US Dollar on Tuesday morning, the Pound (GBP) struggled to replicate this success against its other peers.
This came amid ongoing concerns over the resilience of the UK economy, amid growing signs that the stellar growth seen at the start of the year has now completely evaporated.
This appeared linked to last week’s UK PMIs, which reported the private sector in November suffered its first contraction in growth in a year.
GBP/USD Exchange Rate Forecast: Robust US Inflation to Lift the US Dollar?
Looking ahead, the Pound to US Dollar (GBP/USD) exchange rate may face additional pressure in mid-week trade as the US publishes its latest core PCE price index.
The Fed’s preferred indicator for inflation is expected to have accelerated last month.
Will signs of sticky inflation weaken bets for a December rate cut and lift the US Dollar?
Also set to influence USD exchange rates will be the publication of the latest US GDP figures.
If growth is revised higher in the latest estimate of third quarter GDP this may reinforce any gains for the ‘Greenback’.
Meanwhile, UK economic releases are thin on the ground through the second half of this week, which could leave the Pound exposed to wider market trends.
This content was originally published on ExchangeRates.org.uk