Pound Sterling Holds Firm Ahead of EU-UK Trade Summit in London

Pound Sterling Remains Firm Ahead of EU-UK Trade Summit

The Pound Sterling (GBP) began the week on a firm footing, trading higher against most of its major counterparts on Monday, except for the Euro. The bullish tone comes ahead of a crucial trade summit between the European Union (EU) and the United Kingdom (UK) set to take place in London later today.

Market participants are hopeful that the meeting could yield a new trade agreement, reinforcing economic ties between the UK and the EU following the post-Brexit transition. Such a deal is expected to benefit several key British sectors, including defence, agriculture, and energy.

According to William Bain, Head of Trade Policy at the British Chamber of Commerce, who spoke during a session hosted by Jefferies over the weekend, the proposed deal could open up €150 billion worth of opportunities for UK defence firms through a non-binding defence cooperation pact. In addition, efforts to remove non-tariff barriers on agricultural products are underway, which could further enhance trade flows between both sides.

The British pound has also been supported by strong domestic economic data. Last Thursday, the UK Office for National Statistics reported that GDP grew by 0.7% in the first quarter of 2025, beating expectations and signaling resilience in the UK economy despite global uncertainty.

Meanwhile, the US Dollar (USD) remains under pressure after Moody’s downgraded the US sovereign credit rating from Aaa to Aa1, citing long-term debt sustainability concerns. Although some analysts believe the Federal Reserve will hold off on rate cuts this year, the downgrade has weighed on market sentiment toward the Dollar, providing additional support for GBP/USD.

Traders will be closely watching developments from the EU-UK summit, as any progress on trade arrangements could trigger further movement in GBP pairs.