The British pound climbed above $1.317 on Monday, its highest level in six months, as a weakening U.S. dollar—hit by confusion over American trade policy—boosted sterling.
Sterling rises to over six-month high
Markets responded to President Trump’s decision to temporarily exempt Chinese smartphones and computers from tariffs, though additional levies on semiconductors and potentially phones are expected in the near future. This shifting stance has injected uncertainty into the dollar's outlook, pushing investors toward other currencies like the pound.
Despite sterling’s recent strength, traders continue to price in 75 basis points of interest rate cuts from the Bank of England by year-end, reflecting concerns about slowing economic growth and persistent inflation uncertainty. BoE policymaker Megan Greene said it's too early to judge how the evolving tariff landscape and currency fluctuations will influence UK inflation, underscoring the challenges facing the central bank.
Investor attention turns to key UK economic data
Investor attention now turns to key UK economic data due this week, including employment figures and inflation readings, which could provide further insight into the BoE’s policy path. Markets will be watching closely for any signs of wage pressure or easing price growth that might shift expectations for the pace of rate cuts.
