British Pound Climbs to Six-Month Best Against US Dollar as Trump Unveils Tariffs

April 3, 2025 - Written by Frank Davies

STORY LINK British Pound Climbs to Six-Month Best Against US Dollar as Trump Unveils Tariffs

At the time of writing, Pound US Dollar (GBP/USD) exchange rate was trading at $1.3148 – its highest level since October 2024 and up 1.3% from Wednesday.

The US Dollar (USD) suffered a sharp decline on Wednesday evening and into Thursday’s session after US President Donald Trump introduced sweeping new tariffs.

On what he declared ‘liberation day’, Trump announced a blanket 10% tariff on all imported goods, alongside increased reciprocal tariffs on countries that impose taxes on US exports.

The move intensified concerns that the US economy could slide into recession this year. Analysts at Barclays warned of a ‘high risk’ of recession, with rising inflation and higher unemployment adding to the economic uncertainty.

In response, USD tumbled, with the US Dollar index – which tracks the currency’s performance against a basket of rivals – plunging nearly 1.4% to its lowest level since October 2024.

Meanwhile, the Pound (GBP) capitalised on the US Dollar’s weakness, propelling GBP/USD to its highest level in six months.

While the UK will be affected by the new tariffs, the economic impact is expected to be significantly less severe than in the US. British exports to the US will face a 10% tariff, but this is a milder blow compared to the broader trade restrictions imposed on other nations.

Looking ahead, Trump’s aggressive tariff policy is likely to fuel further volatility in currency markets as traders assess the potential fallout and watch for retaliatory measures from other economies.

If global trade tensions escalate and recession fears deepen, the US Dollar could remain under pressure.

In addition, upcoming US economic data may influence GBP/USD. Friday’s non-farm payrolls report is expected to show a slowdown in job growth, which could further weigh on the ‘Greenback’ if it reinforces concerns about the health of the US economy.

Federal Reserve Chair Jerome Powell is also set to speak on Friday. Should he express worries about the economic impact of the trade war, GBP/USD could climb even higher, potentially testing new multi-month highs.

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TAGS: Pound Dollar Forecasts