FX.co ★ Sterling Falls to 2-Week Low

The British pound declined to below $1.36, reaching a two-week low primarily due to a strengthening US dollar and apprehensions regarding the UK’s fiscal future. In an impactful move, US President Donald Trump announced looming 25% tariffs, effective August 1, targeting 14 nations, including Japan and South Korea. Notably, only the UK and Vietnam have successfully negotiated agreements to avert these new charges, which stand apart from the existing tariffs on automotive products, steel, and aluminum. The UK is urgently striving to complete a deal with the US to remove tariffs on British steel, amid alarms that the tariff could rise to 50%, posing a significant threat to its already delicate domestic steel sector. Simultaneously, concerns about the UK’s fiscal health have dampened market sentiment. The Office for Budget Responsibility (OBR) has highlighted that public debt might surpass 270% of GDP by the early 2070s, attributing this to challenges stemming from an aging population alongside escalating healthcare and pension expenses. Moreover, global tensions and demands for heightened defense spending are further contributing to the long-term fiscal uncertainty.