Pound swings wildly as U.K. trade deal, inflation, and politics collide
The post Pound swings wildly as U.K. trade deal, inflation, and politics collide appeared on BitcoinEthereumNews.com. The British pound is jerking markets in every direction this year, moving without warning and offering zero consistency. Investors trying to price it have been left stuck between rally talk and panic selling. The currency has jumped 7.2% against the U.S. dollar since January, but it’s also dropped 4.3% against the euro, a split that’s made it harder than ever to call. According to CNBC, the entire rally has grown messier as Britain’s economic backdrop keeps throwing curveballs. The U.K. became the first country to strike a trade agreement with Donald Trump’s White House under the president’s new “reciprocal” tariffs. The deal gave British goods an advantage that other nations didn’t get. That helped support the pound, but it didn’t fix the damage from weak labor numbers, public finance stress, and a government in disarray. At the same time, investors have been moving away from U.S. assets, which, of course, pushed the pound higher by default. Markets cut expectations as politics, inflation clash Growth came in stronger than expected earlier this year. Consumer spending looked up. Some businesses showed signs of life. For a minute, there was a flicker of optimism. But then inflation hit harder than markets had priced in. That forced traders to rethink their bets on the Bank of England’s next moves. After the data landed, most players pulled back from expecting more rate cuts this year. Instead, they began to price in a pause, possibly holding rates where they are through the rest of 2025. The impact on the pound was instant. Kamal Sharma, senior FX strategist at Bank of America, said over the phone that as the rate cut narrative faded, sterling spiked, then quickly reversed. “As you’d expect, as the market pared back rate cuts, sterling rallied, and then suddenly, out of nowhere, we…
The post Pound swings wildly as U.K. trade deal, inflation, and politics collide appeared on BitcoinEthereumNews.com.
The British pound is jerking markets in every direction this year, moving without warning and offering zero consistency. Investors trying to price it have been left stuck between rally talk and panic selling. The currency has jumped 7.2% against the U.S. dollar since January, but it’s also dropped 4.3% against the euro, a split that’s made it harder than ever to call. According to CNBC, the entire rally has grown messier as Britain’s economic backdrop keeps throwing curveballs. The U.K. became the first country to strike a trade agreement with Donald Trump’s White House under the president’s new “reciprocal” tariffs. The deal gave British goods an advantage that other nations didn’t get. That helped support the pound, but it didn’t fix the damage from weak labor numbers, public finance stress, and a government in disarray. At the same time, investors have been moving away from U.S. assets, which, of course, pushed the pound higher by default. Markets cut expectations as politics, inflation clash Growth came in stronger than expected earlier this year. Consumer spending looked up. Some businesses showed signs of life. For a minute, there was a flicker of optimism. But then inflation hit harder than markets had priced in. That forced traders to rethink their bets on the Bank of England’s next moves. After the data landed, most players pulled back from expecting more rate cuts this year. Instead, they began to price in a pause, possibly holding rates where they are through the rest of 2025. The impact on the pound was instant. Kamal Sharma, senior FX strategist at Bank of America, said over the phone that as the rate cut narrative faded, sterling spiked, then quickly reversed. “As you’d expect, as the market pared back rate cuts, sterling rallied, and then suddenly, out of nowhere, we…
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