Pound rallies as Trump's tariffs hit the dollar: Sterling surges above $1.30 for the first time in six months
The British pound has risen to its strongest level against the dollar in six months after Donald Trump confirmed sweeping import levies on countries across the world.
Sterling was up by 0.7 per cent this morning to $1.3097 after the President slapped a 10 per cent tariff on US imports of UK goods and 25 per cent on all foreign cars.
The pound is now trading above $1.30 for the first time since last October, having been at $1.298 before Mr Trump's announcement at the White House last night.
But London’s FTSE 100 benchmark index dropped sharply on opening this morning, falling 122.4 points or 1.4 per cent to 8486.09 in the first few minutes of trading.
Meanwhile the pound was trading roughly level against the euro at €1.1964. Against the dollar, the euro rose nearly 1 per cent today to a two-week high of $1.0950.
Mr Trump's measures have sent shockwaves through markets, with global stocks sinking and investors scrambling to the safety of bonds as well as gold.
Other countries and regions faced tougher tariffs than the UK, including the European Union which was hit by a 20 per cent levy, Japan 24 per cent and China 34 per cent.
The US dollar was falling sharply against key currencies today as traders reacted to developments from America amid uncertainty over how global trade will be impacted by the tariffs, and how far affected countries will respond with retaliatory action.
The British pound was up by 0.7% to $1.3097 today - its highest level since October last year
President Donald Trump announces tariffs in the Rose Garden of the White House yesterday
Traders work on the floor of the New York Stock Exchange before the Closing Bell yesterday
In trading in Asia overnight, the Nikkei in Japan tumbled 3 per cent and China's Hang Seng was around 1.5 per cent lower after Mr Trump's self-declared 'liberation day'.
While the US markets closed up overnight after volatile trading, pre-market futures trading pointed to sharp declines in trading today, with the S&P 500, Nasdaq and Dow Jones all expected to open lower, dragged lower by retailers and big tech stocks.
As for other global currencies, the risk-sensitive Australian dollar fell 0.49 per cent to $0.62685, while the New Zealand dollar slipped 0.2 per cent to $0.5733.
The yen strengthened to a three-week high against the dollar and was last up 1.3 per cent at 147.39 per dollar, while the Swiss franc touched its strongest level in four months at 0.8754 per dollar.
Benchmark ten-year Treasury yields tumbled 15 basis points to a five-month low of 4.04 per cent as investors braced for slower US growth, while interest rate futures in America priced in a higher chance of interest rate cuts in the months ahead.
For Asian currencies, China's onshore yuan sliding to its weakest level against the dollar since February 13. China's offshore yuan also hit a two-month low.
Malaysia's ringgit, South Korea's won and the Thai baht all slid against the dollar, while the Vietnamese dong slumped to a record low.
The dollar index, which measures the US currency against six other units, fell to 102.98, its lowest since mid-October. The index is down more than 4 per cent this year.
The index compares the dollar against the euro, Japanese yen, Pound sterling, Canadian dollar, Swedish krona and Swiss franc with various different weightings.
JAPAN - A woman walks past a display showing the Nikkei Stock Average in Tokyo today
INDIA - A display on the facade of the Bombay Stock Exchange building in Mumbai today
CHINA - A man walks past a screen showing stock prices at a securities office in Beijing today
Ahead of Mr Trump's announcement, the Dow Jones Industrial Average in New York had closed up yesterday 235.36 points, or up 0.56 per cent, to 42,225.32.
Meanwhile the S&P 500 rose 37.90 points, or 0.67 per cent, to 5,670.97; and the Nasdaq Composite ended the session up 151.16 points, or 0.87 per cent, at 17,601.05.
Chris Beauchamp, chief market analyst at online trading platform IG, said: 'Investors and businesses are waking up to a new world this morning after Trump's tariff announcement.
'Investors have voted with their feet and have resumed the selling of US stocks despite a small overnight bounce.'
He added: 'Should major partners like the EU impose higher costs then we can be certain the US will also respond in kind. Markets face the kind of trade war not seen for decades.'
Gold hit another fresh record as investors rushed into safe haven assets and with bullion also one of the few commodities exempted from the tariffs.
The precious metal raced to an all-time high of more than $3,167.84 an ounce at one stage.
Linh Tran, market analyst at XS.com, said: 'Unlike previous trade tensions that mainly centred on US-China disputes, this round of tariffs is broader in scope, targeting multiple strategic industries such as electric vehicles, semiconductors, steel, and renewable energy.
'This has raised concerns not only about potential retaliatory measures from affected countries but also about the possibility of a deeper fragmentation of global supply chains in the years ahead.
'The market's immediate reaction was a widespread shift into defensive mode, with capital flowing out of equities and risk assets and into gold - the traditional safe-haven asset.'
