The British pound fell to $1.230, pulling back from a two-week high, as investors awaited clarity on U.S. President Donald Trump's tariff decisions and grew increasingly worried about the UK’s economic prospects.
Pound drops on economic fears, tariff uncertainty
Consumer confidence in the British economy hit a record low, according to the British Retail Consortium (BRC), driven by mounting recession fears. Adding to concerns, the UK’s December budget deficit exceeded expectations, with public sector net borrowing climbing to £17.8 billion ($22 billion), over £10 billion higher than last year, putting added pressure on Finance Minister Rachel Reeves. While Trump refrained from immediately imposing tariffs on U.S. imports upon his return to the White House, he is reportedly considering tariffs on goods from Canada, Mexico, and China starting February 1 and on EU imports.
UK slowdown and rate cut fears weigh on pound
Concerns over a slowing UK economy and potential rate cuts from the Bank of England point to further downside for the pound, with markets anticipating approximately 65 basis points of rate reductions this year.
