Sterling slides as tariff fears, global volatility weigh on markets

The pound sterling fell to a one-year low against the euro and a seven-month low against the yen on Wednesday, driven by a US asset selloff that triggered a rush into safe-haven currencies.

Sterling dropped 0.3 per cent to 86.09 pence versus the euro and hit 185.48 against the yen, its lowest point since mid-September.

The selloff, sparked by US tariffs on global economies, weighed on stocks, the dollar, and US Treasuries.

Prime Minister Keir Starmer had reiterated on Monday that the UK would push for stronger economic ties with the US while working to reduce trade barriers with key partners.

George Vessey, lead forex strategist at Convera, attributed the pound’s decline to weak global investor sentiment and volatility, with investors shifting away from the UK currency in favour of safer alternatives.

He noted that the pound, being a pro-cyclical currency, tends to depreciate in times of economic uncertainty.

Markets are now pricing in about 82 basis points of rate cuts by the Bank of England by December, with a 25-basis-point cut expected in May.

Analysts remain concerned that US tariffs could further hurt global growth and raise questions about the UK’s fiscal stability, which may impact market confidence in the government’s finances.

Attribution: Reuters

Subediting: Y.Yasser