The pounded traded steadily on Monday, heading for its strongest monthly performance against the dollar since late 2023, reflecting how much investors have punished U.S. assets in April.
Sterling was up 0.3% at $1.3345, set for a gain of 3.1% in April, the most in a month since November 2023. Against the euro, the pound has struggled. The euro has risen by nearly 2% in April, marking its largest monthly rise since December 2022, when it rose 2.4% against sterling.
The euro has been a key beneficiary of the investor push out of the dollar and has gained against most major crosses.
Part of the pound’s resilience earlier this year had been built on the expectation that the Bank of England might be slower to cut interest rates than other central banks.
The derivatives market shows traders are banking on around 85 basis points’ worth of cuts by the BoE this year and roughly the same amount from the U.S. Federal Reserve. Sterling’s strength in recent weeks has derived more from investors seeking alternatives to the dollar, given the threat to the U.S. economy from President Donald Trump’s tariffs.
The UK is generally perceived to be less exposed to Trump’s tariffs, once his 90-day pause expires in early July. In 2024, the United States had a $12 billion goods surplus with the UK, compared with a near $300 billion deficit with China and a $236 billion deficit with the European Union, according to data from the U.S. Trade Representative (USTR).
With that in mind, Barclays analysts say they retain their bullish view on sterling for the time being, particularly against the euro.
“The UK’s greater resilience to direct tariffs than the eurozone implies smaller demand damage, thereby offsetting the drag from a more-limited fiscal space,” they said.
(Reporting by Amanda Cooper）
