Pound Sterling Jumps vs Euro, Dollar on UK-US Trade Deal News

May 8, 2025 - Written by David Woodsmith

STORY LINK Pound Sterling Jumps vs Euro, Dollar on UK-US Trade Deal News

The Pound jumped higher against the Euro and U.S. Dollar in Asian trading on Thursday following reports that the US and UK would announce a trade deal later in the day.

The Pound to Dollar (GBP/USD) exchange rate surged to just above 1.3350 with the Pound to Euro (GBP/EUR) exchange rate advancing to 1.1785.

GBP/USD dipped back below 1.3300 in Europe as the details are unlikely to match the headline hype with GBP/USD at 1.3275 as the dollar also made fresh gains.

There are strong expectations that the US will announce a trade deal with the UK after the New York open on Thursday.

According to sources, there will be a deal to lower tariffs in certain specific areas and there may be quotas.

This will not be a full trade agreement.

It also appears that the deal will be to start negotiations. According to the Wall Street Journal; “This announcement is likely just an agreement to start the negotiations, identifying a framework of issues to be discussed in the coming months.”


National Australia Bank senior FX strategist Rodrigo Catril noted that there could be a beneficial impact on global risk; "The market is running with the idea that any trade deal is good news, because it provides a certain degree of clarity and could provide a template for others to follow."

There was still an important note of caution.

Catril added; "the devil will be in the details, these deals are not going to come for free."

Details in key areas such as UK car exports will be important while any UK concessions will also be watched closely with a focus on the digital sales tax.

According to ING; “While US-UK trade relations are not usually a material driver of global financial markets, today's deal may have more impact than usual.”

The bank considers a key element will be whether there is a deal to remove the 10% baseline tariff.

Media reports suggest the baseline 10% tariff on all imports is likely to be maintained.


ING added; “If the baseline 10% is removed, this would be a bullish surprise for risk assets and would probably see an extension of today's dollar and equity market rally.”

If the details disappoint, there would be a less positive impact on risk appetite.

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TAGS: Pound Sterling Forecasts