The pound sterling slipped 0.66 per cent against the US dollar on Monday, falling to $1.23135, as the greenback strengthened after the US imposed tariffs on Canada, Mexico, and China. Meanwhile, the pound rose nearly 0.5 per cent against the euro, reaching 83.225 pence.
The US tariffs —25 per cent on Canada and Mexico and 10 per cent on China—were introduced over concerns about migration and illegal drugs. Analysts noted that currency markets reacted with expectations that the tariffs would drive inflation, leading to higher US interest rates for a longer period, thus supporting the dollar.
President Trump’s comments on Britain’s potential exemption from tariffs sparked optimism in the UK. While he described Britain as “out of line” on trade, he indicated that the UK could avoid tariffs, suggesting a resolution was possible.
Markets are also closely watching the Bank of England’s expected rate cut on Thursday, with analysts predicting a muted market response.
Attribution: Reuters
Subediting: Y.Yasser