Pound to Dollar Today: GBPUSD Rate SOARS on Tariff Crash, Equities Slide

April 3, 2025 - Written by Tim Boyer

STORY LINK Pound to Dollar Today: GBPUSD Rate SOARS on Tariff Crash, Equities Slide

President Trump’s announcement of reciprocal tariffs with heavy punishment against China, Japan and the EU, triggered a slump in risk appetite as markets attempt to digest huge implications.

According to Rabobank; “The US raised its weighted-average tariff to 29%, the highest in over 100 years, and above the Smoot-Hawley tariffs of the 1930s.”

It added; “That’s staggering, not just for the US, or inflation or GDP, but for the global system built on the US as consumer of last resort for everyone else’s overproduction and the US dollar as the lubricant for that trade and the US financial assets everyone accumulates as a result.”

The dollar also came under heavy pressure with a slide in the dollar index to 6-month lows near 102.50 amid fears over the US economy with the US currency also failing to gain defensive support.

According to ING; “the blowback of US tariffs onto the US domestic economy leaves the dollar naked.”

It sees the threat of further dollar index losses to 102.00.

The Swiss franc and yen gained strong support


John Hardy, chief macro strategist at Saxo Bank noted; "Safe haven trades in the wake of the announcement will include the Japanese yen most definitely."

A slide in risk appetite hurt the Pound, but the avoidance of additional tariffs provided net support.

The Pound to Dollar (GBP/USD) exchange rate surged to 6-month highs around 1.3140.

According to UoB, a break above 1.3130 could lead to 1.3270.

The Euro was resilient and the Pound to Euro (GBP/EUR) exchange rate traded around 1.1975 after failing to hold above 1.2000.

Bank of America expects GBP/EUR gains; “The EU faces greater tariff risk than the UK, while seasonals favor the pound.”

US S&P 500 futures slumped just over 3.0% and the FTSE 100 index is set to open over 1.5% lower.


In his long-awaited announcement on tariffs, US Trump announced a baseline 10% tariff on all imports into the US which will start on April 5th.

After a brief risk rally, confidence slumped as additional tariffs were announced.

Additional reciprocal tariffs will be levied on countries depending on the US calculation of net tariffs on US exports and are due to come into effect on April 9th.

Trump stated that the overall reciprocal rate would be calculated at half the tariffs on US goods.

For the UK, the US has deemed no additional penalty is needed with the tariff set at the baseline of 10%.

The US calculates that EU charges to the US are at 39% and the tariff on US imports will, therefore, be set at 20%.

For China, the tariff rate is 34%, on top of the 20% already announced which takes the total tariff to 54%. The figures for Japan and Switzerland are 24% and 31% respectively.

There were no further tariffs on Canada and Mexico.

He also confirmed that 25% tariffs on cars and car parts would proceed and have come into effect on April 3rd.

US bond yields declined sharply with the 10-year yield at 5-month lows below 4.10%.

ING notes that the situation could get even worse; “Given that these tariffs are being presented at 'discounted rates', there is also the potential for them to be increased in the event of retaliation.”

It added; “The jeopardy of a global trade war remains, and hence we're seeing no relief rally in risk assets on the view that all the bad news is out the way and things are as bad as they can get.”

Danske Bank commented on the US economy; “we clearly acknowledge a rising recession risk following the tariff announcements - especially with the Federal reserve facing a stagflationary shock to which it so far has shown a reluctance to react forcefully to.”

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TAGS: Pound Dollar Forecasts