British Pound Falls 2% Against Dollar Amid Economic Worries

GBP/USD has dropped over 2% since July, with losses accelerating late last week and continuing into Monday. Market concerns over a potential UK economic slowdown and growing trade tensions are weighing on the pound. The pair has reached a key support level near 1.3425, with strong oversold conditions suggesting a possible rebound. However, if downward pressure persists, bears may target a break below the June low.

The British Pound (GBP) has experienced a significant decline against the US Dollar (USD) over the past month, with losses accelerating late last week and continuing into Monday. The GBP/USD pair has fallen by over 2% since July, reaching a key support level near 1.3425. The currency is currently trading at its lowest level since June 23, 2025.

Market concerns over a potential UK economic slowdown and escalating trade tensions are the primary drivers behind the pound's depreciation. The UK's Gross Domestic Product (GDP) shrank for the second consecutive month in May, contracting by 0.1% [1]. This contraction, coupled with escalating fiscal risks, has contributed to a negative outlook for the pound.

Additionally, the announcement of 30% tariffs on imports from the Eurozone and Mexico by US President Trump has added to the global trade tensions [1]. This has led to a jittery market mood, with investors seeking safe-haven assets and pushing the pound lower.

The pound's recent performance has been exacerbated by the release of UK Consumer Price Index (CPI) data for June, which is expected to show an increase in inflation. This could lead to an increase in interest rates, further weakening the pound [1].

Technically, the GBP/USD pair has slid below key moving averages, indicating a bearish trend. The Relative Strength Index (RSI) has also fallen to near 40.00, suggesting a potential oversold condition, which could lead to a rebound. However, if downward pressure persists, bears may target a break below the June low.

Investors should closely monitor the upcoming UK labor market data for the three-months ending May, which is scheduled to be released on Thursday. This data could provide further insight into the UK's economic health and influence the pound's performance.

References:
[1] https://www.fxstreet.com/news/pound-sterling-declines-at-start-of-uk-data-packed-week-as-new-tariff-threats-sour-sentiment-202507140732
[2] https://www.ainvest.com/news/inevitable-fiscal-tightening-uk-tax-reforms-spending-cuts-reshape-interest-rates-bond-markets-2507/