Pound Faces Decline Amid US Tariff Impact
The pound steadied after a significant decline against the dollar due to US tariff actions. Sterling's July performance was its worst in three years, dropping nearly 4%. The Bank of England's potential rate cut next week could further influence the currency's direction amid current economic uncertainties.
The British pound steadied on Friday despite undergoing its steepest monthly fall against the dollar in three years. This comes as the U.S. dollar strengthened following President Donald Trump's imposition of new tariffs on numerous trade partners.
In July, the pound depreciated by nearly 4%, marking its largest monthly descent since the September 2022 'mini-budget crisis,' which caused the currency to hit a record low against the dollar and created chaos in the UK bond market. With the Bank of England's meeting next week, a widely anticipated rate cut of a quarter point to 4% could bring interest rates to their lowest in 2-1/2 years.
Currently, sterling holds at $1.3203, remaining close to its lowest point since mid-May. Anticipation surrounds Friday's U.S. nonfarm payrolls report, expected to determine the trajectory of the dollar rally. Market analysts like those from Monex suggest that uncertainty in the UK economic data and fewer significant UK events leave US developments as pivotal for sterling's future.
(With inputs from agencies.)
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