The pound is on course for its biggest gains against the euro in four years after Donald Trump suggested that the UK’s trade issues with the US could be “worked out.”
Global markets tumbled after the US president ordered 25 per cent tariffs on Mexican and Canadian goods, with a 10 percent levy on Canadian oil and Chinese imports.
Mexico and Canada have vowed to take retaliatory measures, while China said it could take “corresponding counter measures”.
On trade with the UK, the US President said the country has been “out of line” but added that the issues could be resolved.
He said: “The UK is out of line. But I’m sure that one, I think that one, can be worked out.”
While sterling fell against a broadly stronger US dollar Monday, it beat other major currencies except for traditional haven the Japanese yen.
The Pound is set to rise for an eighth session against the euro, the longest streak since 2021.
The pound slid 0.66 per cent against the dollar to $1.23135 , but was up 0.4 per cent against the euro at 83.225 pence.
The British currency has proven an unlikely haven from market turbulence caused by US trade tariffs.
Elias Haddad, a strategist at Brown Brothers Harriman, attributed sterling’s outperformance to the UK being “off the tariff hook” with the US administration.
Haddad said: “Warmer UK-EU relations can lead to a more favorable UK business investment outlook, which bodes well for sterling and UK financial markets.”
Trump’s weekend announcement that tariffs on Europe will “definitely happen” sent European car maker shares sharply lower.
The FTSE 100 in London fell 1.2 percent amid the global sell-off, though its losses were less severe than Paris and Frankfurt, which dropped 1.7 percent.
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The market turmoil comes as Sir Keir Starmer prepares to become the UK’s first Prime Minister to attend an EU summit since Brexit, as part of a planned “reset” in relations.
Michael Brown, senior research strategist at Pepperstone, suggested US tariffs would harm the American economy least, leaving “the greenback as the cleanest dirty shirt in the laundry”.
The US dollar surged on currency markets amid expectations that a global trade war would stoke inflation and keep Federal Reserve interest rates higher.
The American currency climbed 0.8 percent against sterling, pushing the pound below $1.23.
The dollar reached its strongest level against the euro in more than two years, with the European currency falling as low as $1.013.
Against other currencies, the greenback hit a record peak versus the Chinese yuan, its highest level against the Canadian dollar since 2003, and its strongest position against the Mexican peso since 2022.
