Pound's Climb as Trump's Tariff Strategy Emerges

The British pound rose by up to 1% on Monday following reports that U.S. President-elect Donald Trump's team is considering tariffs only on critical imports. This could mitigate economic impacts globally. The pound had previously declined owing to expectations of U.S. economic growth and tariff increases.

The British pound surged by as much as 1% on Monday, fueled by reports that advisers to U.S. President-elect Donald Trump might impose tariffs solely on critical imports, potentially mitigating the economic repercussions on other nations. Sterling climbed to $1.255 before settling at $1.2532, reflecting a 0.87% gain.

Last week, the pound plummeted to $1.2353, hitting its lowest point since April, as the dollar strengthened amid forecasts for robust U.S. economic expansion and increased tariffs anticipated in 2025. Economists suggest that widespread tariffs could strain foreign economies and buoy U.S. inflation, potentially restraining Federal Reserve interest rate reductions and bolstering the dollar.

The Washington Post reported Monday that Trump's advisers are contemplating tariffs applicable to all countries but limited to sectors deemed vital to national or economic security. This approach might lessen the tariffs' economic damage, indicating Trump's hesitance to provoke major disruptions at the outset of his second term.

(With inputs from agencies.)