FX.co ★ Sterling Approaches 3-Year High

The British pound climbed to $1.355, approaching its highest level in three years since May 26, buoyed by escalating trade tensions between the United States and China, alongside newly announced US tariffs on metals. President Trump revealed intentions to increase tariffs on steel and aluminum, while China accused the US of violating their latest trade agreement and promised retaliation. Additionally, positive sentiment concerning the UK economy supported the pound. The International Monetary Fund (IMF) has raised the UK's 2025 growth projection from 1.1% to 1.2%, although it cautioned Chancellor Rachel Reeves to exercise fiscal prudence in anticipation of her June 11 Spending Review. Inflation continues to persist, with grocery prices rising by 4.1% in May, marking the highest rate since February 2024, according to Kantar. Consequently, market expectations now forecast about 40 basis points of interest rate reductions from the Bank of England by the year's end.