The US dollar experienced a sharp decline against its major peers on Tuesday, after US President-elect Donald Trump spoke against the strength of the nationâs currency. The British pound was the biggest gainer against the US dollar.
The dollarâs drop followed comments made by Trump during an interview with The Wall Street Journal. The president-elect, who comes in office on January 20, said that that the devaluation of the Chinese yuan is making competition harder for US firms at a time when the dollar is becoming too strong.
The dollarâs strong rate followed a strong rally, which started when Trump won the US presidential election on November 8. His promises of increased fiscal spending and corporate tax cuts raised expectations of higher inflation, which would lead the Federal Reserve to raise its interest rates. However, the greenbackâs rally slowed down during the last three weeks as traders looked for additional signals on Trumpâs economic policy.
Meanwhile, UK Prime Minister Theresa May laid out her plan for the British exit from the European Union. May opted for a hard Brexit; a scenario where the United Kingdom would give up its access to the European single market in exchange for full control over its borders and immigration laws.
After months that lacked clarity on the future of the nationâs membership in the EU, which weighed down the pound, the British currency found support in Mayâs plan.
GBP/USD traded at 1.2393 as of 19:45 GMT on Tuesday, from 1.2404 at 19:05, the pairâs highest level since January 5. GBP/USD opened trading today at 1.2041.
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