The British pound strengthened by 0.3% against the dollar, reaching $1.2513, as market uncertainty over President Donald Trump’s fluctuating tariff policies caused volatility across global markets.
Initially, the dollar surged following Trump’s announcement of new tariffs on Mexico, Canada, and China, alarming investors and driving the greenback higher. However, the dollar quickly retreated after the White House unexpectedly delayed tariffs on Mexico and Canada, offering brief relief to markets. Despite this, Trump’s move to impose fresh tariffs on Chinese imports dampened hopes of a trade war de-escalation, prompting Beijing to retaliate with its own tariffs. This renewed tension between the U.S. and China stoked fears of an escalating trade conflict.
While the weaker dollar supported the pound, sterling underperformed compared to its major counterparts as investors remained cautious ahead of the Bank of England’s (BoE) monetary policy decision scheduled for Thursday. The pound remained steady against the euro at €1.2017 on Wednesday morning.
Meanwhile, gold prices soared to a record high, with investors seeking refuge in the precious metal amid growing geopolitical uncertainty. The spot price of gold jumped 1.85%, reaching $2,868.08 per ounce, while gold futures rose 0.7% to $2,830.70. Gold has now gained 9% in 2025, building on a 26% increase in 2024. Analysts suggest that gold’s rally is driven by concerns over the potential economic disruptions caused by Trump’s tariffs. Deutsche Bank strategist Jim Reid noted that while markets have reacted positively to tariff delays, concerns about trade tensions persist, bolstering gold’s appeal.
Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, referred to gold as “the ultimate Trump hedge,” citing growing demand for safe-haven assets amid rising global uncertainties. Gold hit a record high for the fourth consecutive session, peaking at $2,860 per ounce in Asia, with analysts predicting further gains if geopolitical tensions persist.
In the oil markets, prices recovered slightly after plunging more than 3% due to concerns that a U.S.-China trade war could dampen global growth and reduce oil demand. Brent crude futures fell 0.7% to $75.70 per barrel, while U.S. West Texas Intermediate (WTI) crude dropped 0.5% to $72.33 per barrel. Despite the early losses, the market found support after Trump signed a directive aimed at intensifying sanctions on Iran, potentially reducing its oil exports.
Sanctions enforcement could significantly impact Iran’s oil exports, which have remained relatively resilient despite previous sanctions. Experts suggest that tightening sanctions could cut Iran’s exports by as much as two-thirds.
Projections from Goldman Sachs, JPMorgan, and Morgan Stanley now predict that Brent crude will average $73.01 per barrel in 2025, while WTI is forecast to average $68.96.
In broader market movements, the FTSE 100 index was down 0.1%, settling at 8,563 points on Wednesday morning.
