Pound Sterling Hits Three-Year High Against US Dollar as Trump Suspends EU Tariffs

Pound Sterling Climbs to Three-Year High Amid US Tariff Suspension

The Pound Sterling surged to a three-year peak near 1.3600 against the US Dollar following US President Donald Trump’s decision to delay the imposition of 50% tariffs on European Union (EU) imports until July 9. This unexpected suspension came after a weekend phone call between Trump and European Commission President Ursula von der Leyen, easing some market fears about escalating trade tensions between the US and the EU.

US Dollar Weakness Amid Tariff Uncertainty

The decision to postpone tariffs provided relief to global markets and further weakened the US Dollar, which has been under pressure due to President Trump’s inconsistent trade policies. The US Dollar Index (DXY), which measures the strength of the Greenback against a basket of six major currencies, dropped to around 98.70 — its lowest level in a month. This decline reflects investor skepticism over the reliability of the US Dollar as a safe haven amid ongoing economic and political uncertainties.

Market Expectations for Bank of England’s Rate Policy

Meanwhile, the Pound’s rally is supported by expectations that the Bank of England (BoE) will be cautious in its monetary policy moves this year. Market analysts predict that the BoE will only lower interest rates once more in the remainder of the year, maintaining a relatively stable interest rate environment that supports the currency’s strength.

Continued Tariff Threats Fuel Volatility

Despite the temporary relief, the market remains wary as President Trump has issued several fluctuating tariff threats, including a recent proposal to impose 25% tariffs on Apple for manufacturing products overseas. Such unpredictable trade policies continue to contribute to currency market volatility, underscoring the importance of closely monitoring US trade and fiscal developments in the coming months.

Overall, the Pound Sterling’s surge reflects a combination of easing trade tensions with the EU and cautious optimism about the UK’s monetary policy outlook, set against a backdrop of ongoing US policy uncertainty.