The British pound experienced upward movement, reaching $1.277, driven primarily by a weakening US dollar in the face of escalating trade tensions between the US and China, and the European Union. Concerns about the potential impact of these tariffs on the UK economy are growing, influencing market expectations regarding future monetary policy decisions by the Bank of England.
- The British pound rose to $1.277.
- The rise was supported by a weaker US dollar.
- US-China trade tensions intensified, with China raising tariffs on US goods.
- The European Union approved tariffs on US goods.
- Bank of England Deputy Governor Clare Lombardelli warned tariffs could weigh on UK growth.
- Markets now anticipate a higher probability of a 50 basis point cut in May by the Bank of England.
- The market forecasts four total rate cuts by the Bank of England by the end of the year.
- A second rate cut in June is seen as almost certain.
- A third rate cut is fully priced in by September.
The shift in market sentiment suggests an expectation for more aggressive monetary easing in the UK in response to potential economic headwinds arising from global trade disputes. Increased anticipation of rate cuts may impact the pound’s value and influence investment decisions, leading to changes in the overall economic outlook for the UK.