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Yesterday the story was all about the US dollar coming under pressure once again from the continuing trade war. GBP/USD hit its best rate since January 2022, and the dollar lost more than 1% against leading currencies, taking its decline since the start of 2025 to more than 10% against the euro and 8% against the pound.
However, air strikes overnight from Israel against Iran’s nuclear facilities and senior military commanders have sent nervous investors back to the dollar and GBP/USD has lost around three quarters of a cent.
Yesterday the British economy recording a fall in April’s Gross Domestic Product (GDP) figures. The 0.3% month-on-month drop in GDP surprised the markets – although a smaller drop had been expected. While this will put more pressure on the Bank of England ahead of next week’s interest rate decision, the next cut is not expected until September.
Britain’s trade deficit almost doubled between March and April. This can largely be blamed on a £2bn fall in exports to the USA, and potentially a sign that countries hit by US tariffs are dumping goods on the UK instead.
There was some good news though, as the FTSE 100 closed at a new record high. And in a sign that business has a grim sense of irony, the troubled discount store chain Poundland was sold, for just under a pound.
Next week is a busy one, with interest rate decisions on both sides of the Atlantic and no doubt more tariff troubles.
Make sure any upcoming transactions are protected against the risks of sudden market movements. Secure a fixed exchange rate now with a forward contract; call your Business Account manager on 020 3918 7255 to get started.
GBP: Pound hits 3½ year high against US dollar
Sterling joined in with the general pile-in against the US dollar yesterday, while dropping to a five-week low against the euro. While that has been partially reversed overnight, next week the volatility may well continue, with inflation data on Wednesday ahead of the interest rate decision on Thursday.
GBP/USD past year
EUR: Strong gains for single currency
The only was up for the euro – with close to a 1% gain on USD and smaller but still significant advances on the pound, yuan and Australian dollar. We’re getting final results for inflation this morning and Monday, with the ZEW Economic Sentiment Index the main event of early next week.
EUR/USD past year
USD: More losses ahead of Fed’s decision week
The US dollar made its biggest losses against the Swiss franc, Norwegian krone and euro yesterday, as the third of three significant downward lurches of this spring and summer knocked another 1% or so off the value of the US dollar. The big event coming up is the interest rate decision on Wednesday, but a ‘risk off’ sentiment arising from increased tension between Iran and Israel may protect its position.
USD/GBP past year
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