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The Pound Sterling rises to near 1.2600 against the US Dollar due to positive developments in the Russia-Ukraine peace truce. Fears of US President Trump’s tariffs on Canada, Mexico, and China loom large. The BoE is expected to follow a careful and gradual policy-easing approach. The Pound Sterling (GBP) gains ground against the US Dollar (USD) after a two-day correction and rebounds to near 1.2610 in European trading hours on Monday. The GBP/USD pair bounces back as the risk premium of the US Dollar diminishes on optimism over a peace truce between Russia and Ukraine. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, falls to near 107.25 from an over two-week high of 107.65 posted on Friday. Over the weekend, United Kingdom (UK) Prime Minister Keir Starmer said European leaders agreed to present a peace plan to Washington. The meeting between European leaders and Starmer was also attended by Ukrainian President Volodymyr Zelenskyy, potentially a big positive step towards ending the three-year-long war in Ukraine. Technically, signs of easing geopolitical tensions diminish the safe-haven appeal of the US Dollar. However, investors should avoid betting big against the US Dollar due to looming tariff fears. United States (US) President Donald Trump is poised to slap tariffs on Canada, Mexico, and China for failing to restrict the flow of fentanyl into the US. US Commerce Secretary Howard Lutnick confirmed over the weekend that the President’s plans of imposing tariffs on Canada and Mexico on Tuesday are on. However, his comments indicated that there is room for negotiation over the degree of tariffs.  US President Trump threatened to impose a 25% levy on Canada and Mexico and an additional 10% on China. Trump also slapped 10% tariffs on China in the first week of February. Daily digest…

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Filed under: News - @ March 3, 2025 9:21 am