FX.co ★ Sterling Hovers at Near 4-Year High

The British pound remained stable at approximately $1.371, hovering near its highest level since October 2021, buoyed by the implementation of a new trade agreement between the UK and the US. This deal significantly reduces tariffs on British car exports from 27.5% to 10% and removes duties on aerospace components, including engines and aircraft parts. However, a base tariff of 10% on cars is still applicable, and negotiations on eliminating tariffs for key steel products are ongoing. Meanwhile, the UK’s GDP growth for the first quarter was confirmed at 0.7%, consistent with previous estimates. The pound continues to gain strength as the Bank of England remains hesitant to reduce interest rates, unlike other central banks such as the European Central Bank. The persistence of inflation in the UK remains a key factor, with core inflation exhibiting little change over the past year, posing challenges for Bank of England officials and complicating decisions on rate cuts. Additionally, the US dollar weakened as attention turns to President Trump's proposed tax and spending bill, currently under Senate review. This bill could potentially add $3.3 trillion to the national debt, increasing uncertainty regarding US fiscal policy and the independence of the Federal Reserve.