Pound to Dollar News: GBP/USD Gains as Markets Downplay Trump Tariff Threats

February 26, 2025 - Written by David Woodsmith

STORY LINK Pound to Dollar News: GBP/USD Gains as Markets Downplay Trump Tariff Threats

Pound Sterling edged higher on Tuesday, with the pairing approaching its strongest level in two months.

At the time of writing, the Pound US Dollar (GBP/USD) exchange rate was trading at around $1.2663, up approximately 0.4% from the day’s opening rates.

The US Dollar (USD) struggled to find support on Tuesday despite fresh comments from US President Donald Trump regarding trade policy.

During a press conference on Monday evening, Trump reaffirmed that 25% tariffs on imports from Mexico and Canada would be implemented next week, following a temporary delay.

While this initially bolstered demand for the safe-haven US Dollar in overnight trade, these gains faded by the European session as investors appeared unconvinced that the tariffs would be fully enforced.

Further pressure on the US Dollar came later in the session as a slump in US Treasury yields weighed on the currency.

Meanwhile, the Pound (GBP) found support on Tuesday following an announcement by UK Prime Minister Keir Starmer regarding military spending.

Addressing Parliament, Starmer confirmed that the UK will increase defence expenditure to 2.5% of GDP by 2027, an accelerated timeline from the previous goal of reaching this level by 2030.

The news was well received by GBP investors, as the boost to the defence sector is expected to contribute to economic growth in the coming years.

With little impactful UK or US economic data scheduled for release, the Pound to US Dollar exchange rate may continue to be influenced by global geopolitical developments.

Market uncertainty surrounding US trade policy and Trump’s stance on international relations could see investors favour the US Dollar as a safe-haven asset.

Additionally, GBP traders will be paying close attention to Starmer’s upcoming meeting with Trump on Thursday.

If the meeting signals stronger UK-US trade relations, Sterling could benefit. However, signs of friction between the two leaders may exert downward pressure on the Pound.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Pound Dollar Forecasts