Sterling rallied against the dollar on Wednesday morning, heading more than 0.4% higher to trade at above the $1.28 mark, as markets continue to digest US president Donald Trump’s latest moves, both in tariffs and with regards to the Ukrainian war.
The rally reflects the dollar’s weakness, as the dollar index that tracks the greenback against a basket of currencies (DX-Y.NYB) dropped 0.7% in early trade.
Currency traders focused on the world’s reserve currency are also worried about growth, said Neil Wilson, an analyst at TipRanks.
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“Tariffs push up inflation, which ought to keep the Fed tighter for longer, which ought to be good for USD,” he said. “But the weakness in USD vs the relative strength in EUR indicates that the market thinks Trump’s policies may be bad for the US and good for Europe, which seems counterintuitive, no?
“GBPUSD at 1.28 also suggests that broad dollar weakness is reflective of concerns about then US economy – the term ‘Trumpcession’ is doing the rounds.”
As of 19:12:23 GMT. Market open.
The pound fell against the strong Euro, dipping around 0.2% to trade just above 1.20.
“European stocks rallied and German bond yields surged to push up the euro to its best in months on a seismic spending plan by the incoming government in Berlin,” explained Wilson.
As of 19:12:44 GMT. Market open.
Gold prices rose on Wednesday as a flight to haven assets continues amid geopolitical uncertainty. Gold futures were up 0.4% by mid-morning in London, trading at around $2,930 an ounce.
Meanwhile, spot prices were just above the flatline, hitting the $2,918 mark.
Read more: Bank of England expects UK inflation rise amid ‘even greater uncertainty’
Investors are looking to the yellow metal amid inflation fears, as US tariffs kick in and Ukraine peace efforts stall.
As of 15:02:47 GMT-4. Market open.
Oil prices tipped lower on Wednesday after news from Opec+ on Monday that it will look to increase production from April.
The bloc had previously delayed plans to unwind production cuts, and had been widely expected to extend this.
The cartel said that it will aim for the “gradual and flexible return” of 2.2m barrels a day of oil production over the next year and a half.
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Brent crude was trading 0.2% lower at $70.42 a barrel, while West Texas Intermediate fell 0.6% to $67.83. Over the last five sessions the pair have lost 2.3% and 1.1% respectively.
Crude is down 10% from its $82 a barrel high earlier this year.
