The dollar fell down after China increased tariffs on U.S. imports

The pound has been enhanced by hopes growing expectations that the Bank of England will raise interest rates.

The dollar slipped lower against a currency basket on Monday as traders remained cautious amid escalating trade tensions after China increased tariffs on U.S. imports, adding to fears over the prospect of a trade war.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.16% to 89.61 by 07:28 GMT.

China announced today that it is increasing tariffs by up to 25% on certain U.S. imports in response to U.S. duties on imports of aluminium and steel.

The move intensified trade tensions between the world’s two largest economies.

The dollar held steady against the yen, with USDJPY last at 106.29, having risen 1.36% last week after rebounding from 16-month lows.

The dollar had risen last week boosted by easing concerns over the threat of a trade war and hopes for a diplomatic breakthrough with North Korea over its nuclear program.

The euro was little changed against the dollar, with EURUSD last at 1.2330 at 08:30 GMT.

Markets in Europe were to remain shut on Monday for the Easter holiday, while U.S. markets were to re-open after the Good Friday holiday.

Sterling pushed higher against the dollar, with GBPUSD rising to 1.4062.

The pound has been boosted by hopes growing expectations that the Bank of England will soon raise interest rates and by renewed optimism over Brexit after a transition deal on Britain’s departure from the European Union was agreed last month.

The pound was also higher against the euro, with EURGBP down 0.25% to 0.8767.

Investors were looking ahead to the Institute for Supply Management’s U.S. manufacturing index later in the day.

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