GBP/USD Alert: Pound Rallies vs Dollar as Mexico Secures 1-Montb Tariff Delay

February 3, 2025 - Written by David Woodsmith

STORY LINK GBP/USD Alert: Pound Rallies vs Dollar as Mexico Secures 1-Montb Tariff Delay

BREAKING: The Pound to Dollar exchange rate (GBP) jumped to 1.2420 from around 1.2330 at the US open. Risk appetite recovered strongly after Monday’s opening following reports that President Trump’s 25% tariffs on Mexico had been delayed by 1 month.

The dollar also pared gains against European currencies amid hopes that bilateral negotiations could lead to further concessions.

The Pound to Euro (GBP/EUR) exchange rate held firm around 1.2030.

The move followed a conference call between Trump and Mexican President Sheinbaum.

Volatility will inevitably remain high with risk vulnerable again if Canada adopts a hardline stance and fails to secure a reprieve.

According to sources, Mexico wanted the tariffs dropped entirely, but Trump would only agree on a 1-month postponement.

Inevitably, the US Administration will look to force more concessions from Mexico.

The immediate relief sparked hopes for a delay to tariffs on Canada and helped trigger a rebound in risk appetite, with equities paring losses.

The Canadian dollar rebounded strongly with USD/CAD at 1.4575 from 21-year highs near 1.4800.

Scotiabank commented, “The weekend advance has left a gap on the intraday chart between 1.4550/00, which markets may have to try and fill before the USD’s broader advance resumes.”

The Euro also rallied, although the threat of tariffs will loom large as a negotiating tactic.

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TAGS: Pound Dollar Forecasts