The pound has surged to a four-month high against the dollar as uncertainty grows over Donald Trump’s trade tariffs. Sterling climbed above $1.29 for the first time since November following the US president’s announcement of a one-month delay on tariffs for car manufacturers in Mexico and Canada.
The value of sterling has risen 3.9% since Trump first announced plans to impose tariffs in early February. An analyst at Trading Economics noted that the pound is now seen as “less vulnerable” to US tariffs, particularly after Trump suggested a potential trade deal with the UK that could help avoid new duties.
Kyle Rodda, an analyst at Capital.com, said US trade policy remains the “biggest uncertainty” for the markets, but the exemption for car makers from tariffs “supported hopes that rational heads prevail in the White House, and that even if trade relations don’t improve, at least they won’t get any worse.”
Global currencies have strengthened against the dollar, influenced by a combination of factors, including a sharp sell-off in bond markets that pushed yields higher.
Asian shares tracked a rebound on Wall Street after Trump moderated his stance on trade tariffs.
US futures showed little change, but major benchmarks surged across Asia. Tokyo’s Nikkei 225 gained 0.9%, while Hong Kong’s Hang Seng jumped 2.6%. The Shanghai Composite and South Korea’s Kospi also posted gains.
The US dollar’s dominance as the world’s ultimate “safe-haven currency” is being “shaken and severely tested,” the CEO of global financial advisory giant, deVere Group, warned.
Nigel Green said the president’s “erratic policy decisions” are accelerating the global shift away from the dollar. Investors are scrambling for alternatives, and the consequences could “become permanent”.
He said: “The dollar has long been the anchor of global finance, but Trump’s actions are eroding confidence at a stunning pace. The world is watching the US turn inward with protectionism, trade wars, and erratic diplomacy. The market response is already in motion. The dollar has slumped to a four-month low despite Trump’s rhetoric that tariffs would ‘make America stronger.’
“Instead, the world is moving to insulate itself. Major economies are advancing plans to settle trade in alternative currencies. China and Russia are expanding the use of the yuan and rouble in cross-border payments. The euro is gaining traction for reserves.”
He added: “The once-unthinkable de-dollarisation seems to be happening at an accelerated pace, and Trump is handing the world every reason to continue.”
