Pound Sterling RALLIES Against Euro, US Dollar on Trump EU 50% Tariff Threat

May 23, 2025 - Written by Ben Hughes

STORY LINK Pound Sterling RALLIES Against Euro, US Dollar on Trump EU 50% Tariff Threat

UPDATE: The Pound Sterling has risen against both the Euro and the U.S. Dollar ahead of the weekend after President Trump triggered another spasm of market fear surrounding trade tariffs.

The FTSE 100 declined on Friday, tracking a broader market sell-off after US President Donald Trump announced plans to impose 50% trade tariffs on the European Union.

The Pound to Euro exchange rate (GBP/EUR) traded up to 1.1904, while the Pound to Dollar exchange rate (GBP/USD) advanced to 1.34922.

At the New York open on Friday, Trump firstly threatened to impose 25% tariffs on Apple iPhone if they are not manufactured in the US.

Trump also stated that the EU has been very difficult to deal with on trade and he stated that he was recommending imposing 50% tariffs on EU imports into the US from June 1st.

There was a sharp market reaction in currency markets with a jump in demand for the Yen and Swiss franc as defensive plays surged.

EUR/USD initially posted sharp losses to near 1.1300 before recovering on potential defensive demand to trade around 1.1340.


The Pound was resilient in global markets with GBP/USD breaking above the 1.3500 level to trade at fresh 3-year highs around 1.3520 while GBP/EUR jumped to 7-week highs around 1.1930 after breaking above 1.1900.

Equities posted sharp losses with a 2% slide in the Eurostoxx 600 index and the FTSE 100 index declined 1.0%.

The sharp market reaction was magnified by position adjustment into the UK and US holiday weekend.

The Pound usually loses ground when risk appetite slides, but the fact that the UK has managed to secure a trade deal with the US was important in providing Sterling support.

This threat may well be a negotiating tactic from Trump in an attempt to secure concessions from the EU in trade talks, but market fears are liable to remain elevated in the short term.

The Euro to Dollar exchange rate (EUR/USD) advanced 0.63 percent ahead of the weekend, to trade at 1.13538.

Looking ahead to the pound sterling forecasts, Scotiabank analysts believe the recent price action in cable signals a potential continuation of the broader uptrend.


"GBP/USD short-term technicals are bullish. Strong weekly gains for the GBP suggest the broader bull trend in place since the start of the year is poised to resume.

"Spot gains are extending nicely above the downward-sloping channel (bull flag pattern) that developed over the past month, implying the risk of another, fairly quick and significant jump (~700bps) in the pound over the next 1-2 months. Support is 1.3430.

"Resistance is 1.3740/50 and 1.40," said the bank.

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TAGS: Pound Sterling Forecasts