GBP/USD hits 2-week low at 1.2420 on UK fiscal concerns, tariffs

GBP/USD plummeted 0.8% to 1.2420, marking a two-week low as UK fiscal challenges and potential US tariffs weigh heavily on sterling. The UK budget deficit widened to £17.4 billion in May, exceeding forecasts and raising concerns about fiscal sustainability. Markets now price a 40% chance of Bank of England rate cuts by year-end, up from 25% last week. Trump's tariff threats particularly impact the UK given its £184 billion annual trade relationship with the US. Technical analysis shows GBP/USD breaking below key 1.2450 support, with next targets at 1.2380 and 1.2350. The 200-day moving average at 1.2385 offers potential support. UK gilt yields rose 15 basis points to 4.35%, reflecting fiscal concerns. Sterling weakness may accelerate if upcoming UK retail sales disappoint or if concrete tariff announcements emerge targeting British exports.