The dollar is gaining across the board Wednesday morning as the GBP/USD pair hits its lowest levels since August 2017. The global trade war is keeping markets in check as China’s exports in July grew faster than expected.

US prepares more duties as Chinese exports surprise

The United States said it will begin enforcing a 25% tariff on another $16 billion in Chinese goods on Aug. 23.

The list of products – 279 items – includes motorcycles and railway cars. This latest escalation in the threats between the U.S. and China is keeping markets on edge regarding the future of global trade.

Numbers out of China overnight show that exports in July grew more than expected and imports also surged. Exports year over year for July grew 12.2%, compared to the 10% expected. Imports far outpaced expectations of 16.2%, coming out at 27.3% growth. The trade balance for July was a surplus of $28 billion – less than the $39.3 billion expected due to higher imports.

The rise in exports may show an effort by the business community to increase orders before the impact of tariffs sets in.

Dollar gains on trade uncertainty, pound selloff

The U.S. dollar is once again up against its major peers and the trade uncertainty gives it a boost.

The EUR/USD pair is dipping further below 1.16, hitting as low as 1.157. The dollar is also benefiting from better performing equities. The euro is heading toward yearly lows.

The pound continues to experience a selloff from Brexit concerns. This morning the GBP/USD extended its losses after comments from Bank of England MPC member Ian McCafferty.

McCafferty said it is appropriate for the markets to expect a couple small rate hikes over the next couple years.

GBP/USD fell from 1.295 to 1.285 – the lowest level since August 2017. Comments earlier in the week from the U.K. trade minister saying the chances of a no-deal Brexit are about 60% are still weighing on sterling.

Turkey’s lira erases gains

Investors are saying that the only way for Turkey to recover from its market meltdown is for President Recep Tayyip Erdogan to back down. He is an opponent of higher interest rates and has also refused to let the U.S. interfere in the detention of an American pastor in his country.

However, with the lira losing about 30 percent this year due to U.S. sanctions, Erdogan may have no choice but to back down to the United States.

USD/TRY is hovering around 5.28 after hitting highs of 5.37 Monday. If the pair climbs higher, we could see the central bank stepping in. Investors are already calling on the bank to intervene, however, there is hope that a diplomatic trip to Washington, D.C. could pull the lira out of its slump.