Pound Rebounds Against Euro and Dollar After US Tariff Pause

April 10, 2025 - Written by James Fuller

STORY LINK Pound Rebounds Against Euro and Dollar After US Tariff Pause

Pound Sterling advanced against the euro and US dollar into Thursday's session after markets reacted dramatically to President Trump's announcement of a 90-day tariff pause, sharply reducing fears of an immediate global recession.

GBP/USD climbed from lows of 1.2748 to current levels of 1.280, while GBP/EUR rose from 1.1515 to trade at 1.1727.

Although risks persist, market sentiment turned rapidly positive, easing currency tensions.

"Hysteria took a grip of US stock markets yesterday, with the S&P500 and Nasdaq up 9.5% and 12% respectively," says Gustav Helgesson, Macro Strategist at SEB.

The optimism quickly spread globally, strengthening risk-sensitive currencies such as the Norwegian and Swedish krona, which recovered notably from recent pressures.

The FX analyst added, "the Norwegian krone in particular, which has been plagued by falling oil prices, weak sentiment and low liquidity, strengthened by as much as 50 figures(!) against the euro."

The US dollar regained strength against the euro, supported by a stabilisation of market sentiment and rebounding Treasury yields following recent volatility.


"The US dollar is recovering against the euro, while the Norwegian and Swedish krona are strengthening sharply," said Helgesson.

Bond markets experienced significant turbulence prior to Trump’s intervention, with longer-term yields initially surging due to forced selling and geopolitical tensions. Trump's move triggered a partial reversal, calming bond-market nerves.

"After Trump's turnaround, the US 10- and 30-year yields have fallen by 22 and 33 basis points, respectively."

Helgesson highlights how even President Trump appeared mindful of recent financial market disruptions, acknowledging the bond market’s improved outlook after his policy shift.

"'If you look at the bond market now, it's beautiful,' the president said last night. Perhaps the president is not immune to developments in the financial market, after all."

ING economists highlight pound sterling’s vulnerability amid recent UK gilt underperformance, suggesting deeper structural concerns.

The sharp sell-off in gilts coincided directly with pressure on sterling, raising alarm.


"EUR/GBP briefly traded to 0.8650 yesterday – a move which seems to coincide with the sell-off in UK gilts," says Chris Turner, Global Head of Markets and Regional Head of Research for UK & CEE at ING Bank.

Due to lingering uncertainties in bond markets, the analyst remains cautious about GBP gains in the short term, especially against the euro. However, Turner sees potential support for GBP/USD around 1.2800 if their euro-to-dollar exchange rate scenario holds.

"We're a little reluctant to call EUR/GBP quickly back below 0.8500 since bond markets might struggle with another high US CPI reading today," says Turner.

"GBP/USD could meet buyers near 1.2800 if our EUR/USD thesis holds today."

Markets have now priced multiple Bank of England rate cuts this year, reflecting growing pessimism on the UK's economic outlook.

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TAGS: Pound Sterling Forecasts