The British pound (GBP) weakened near 1.3400 against the US dollar (USD) at the start of the week. The GBP/USD pair weakened as the US dollar attracted buying interest following the announcement of a trade framework between the United States (US) and the European Union (EU).
The US Dollar Index (DXY), which tracks the greenback against six major currencies, rose near 97.90 at the time of writing.
Over the weekend, US President Donald Trump announced a trade agreement with the European Union, stating that the base tariff on imports from Brussels would be 15%, half the level Trump had threatened in the middle of the month.
The US-EU tariff deal has led to a sharp increase in demand for riskier assets. However, risk-sensitive currencies have struggled to capitalize on the positive market sentiment, as the agreement has also improved the outlook for the US dollar.
The confirmation of a trade agreement between the two countries on both sides of the Atlantic has reduced uncertainty surrounding the August 1 tariff deadline, limiting the US dollar's gains. Confirmation of the US-EU trade pact indicates that Washington has reached agreements with several of its major trading partners, except Canada and Mexico.
Meanwhile, investors are looking forward to US-China trade talks in Stockholm to discuss a tariff truce, which are set to begin Monday. According to the South China Morning Post (SCMP), Washington and Beijing are expected to extend their tariff truce for 90 days, which is due to expire on August 12. (alg)
Source: FXstreet
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