FX.co ★ Sterling Up on Trade Prospects, But Softens Pre-BoE

The British pound experienced a brief surge, climbing 0.5% to reach $1.3356, following reports that President Trump was set to announce a US-UK trade deal later in the day. The initial boost was fueled by news reports accompanying Trump’s social media hint at a "major trade deal," which was later associated with the United Kingdom. This rise in the pound also mirrored a general weakening of the dollar, a trend that has prevailed in the currency markets ever since Trump’s announcement of tariffs on April 2, which incited fears of a potential US recession alongside ongoing inflation concerns. Subsequently, the pound's gains were short-lived, dropping to $1.327 as investors redirected their attention to the Bank of England’s forthcoming interest rate decision. A cut of 25 basis points is widely anticipated, but market participants will be focusing intently on any forward guidance regarding additional easing measures in the upcoming months, particularly given the heightened optimism tied to the prospective trade deal with the US.