Sterling, Euro Strengthen as Forex Traders Sell Dollar
Sterling, or the British pound, and the euro strengthened against the US dollar in the forex market as the Chinese government pulled back on dollar purchases in retaliation to a 104% tariff on the country’s exports.
Foreign exchange volatility is increasing across the board since “liberation day,” but the impact has been very asymmetric so far. Investors are selling dollars, as some analysts said the US-denominated assets, including Treasury, are no longer safe haven bets.
With reactions coming from across the space, analysts have projected a higher global inflation for 2025. Key rating agencies have become bearish about the growth outlook amidst rising global recession fears.
In the forex market, the sterling rose to $1.277, helped by a weaker US dollar. The dollar bear rotated out of the dollar index in reaction to intensifying US-China trade tensions. The market saw the dollar index weaken on the back of the US trade protectionist practice that raised tariff on Chinese exports to 104%.
Also, China announced it will raise tariffs on US goods to 84% from April 10, in retaliation for the latest US move that pushed levies on Chinese imports above 100%.
British pound/dollar: 1.2824 dollars per British pound. The sterling has gained 0.46% as against the dollar – largest one-day percentage gain since Thursday, April 3, 2025
In the UK, Bank of England Deputy Governor Clare Lombardelli warned the tariffs could weigh on UK growth, though the inflation impact is still unclear. In response, traders now see a stronger chance of a 50 basis point cut in May, with four total cuts expected by year-end—up from three earlier this week.
The market also sees a second cut in June as nearly certain and a third fully priced in by September. The euro climbed back above $1.1, approaching its strongest level since October 2024, as escalating trade tensions and signs of political stability in Europe buoyed the single currency.
The escalation prompted a shift in market sentiment, with investors rotating out of traditional safe havens such as U.S. Treasuries and the dollar. On the monetary front, the European Central Bank is widely expected to deliver a 25 basis point rate cut this month.
Markets are also pricing in two more cuts by year-end, with speculation growing around a potential third move should economic conditions continue to weaken. #Sterling, Euro Strengthen as Forex Traders Sell Dollar First Holdco Falls below N1 Trillion in Equities Market
