Sterling Holds Near $1.35 as Trump’s 10% Global Tariff Takes Effect

Sterling remained little changed at $1.35, staying close to last week’s one-month lows, as US President Donald Trump’s new 10% global tariffs came into effect. Although Trump had threatened to raise the rate to 15% over the weekend, the lower-than-expected levy offers only limited relief for UK businesses. The tariffs follow a setback for Trump on Friday, when the US Supreme Court struck down his sweeping “liberation day” import duties imposed last year. Under the new measures, the US Customs agency will impose “an additional 10% ad valorem duty on imported articles of every country” for 150 days from Tuesday, unless specifically exempt. Meanwhile, William Bain, head of trade policy at the British Chambers of Commerce, noted that “while a new 10% tariff rate, instead of the threatened 15%, provides some relief, it highlights how difficult it is for businesses to plan ahead.”

Sterling traded at $1.35, rebounding from last week’s one-month lows as the USD weakened amid renewed uncertainty over US trade policy. Over the weekend, US President Donald Trump announced plans to lift a temporary global tariff to 15% from 10%, after the Supreme Court blocked his broader tariff measures. US Trade Representative Jamieson Greer stressed existing deals, including last year’s agreement with UK Prime Minister Keir Starmer, remain in force. Yet Andy Haldane, president of the British Chambers of Commerce, said the 15% tariff could apply from tomorrow unless the government provides clarification. The pound also drew support from a run of strong domestic data released last week. The latest S&P Global UK PMI showed private-sector activity expanding in February at its fastest pace since April 2024, while January retail sales exceeded expectations. Meanwhile, public sector net borrowing recorded a £30.4 billion surplus, the largest monthly surplus on record.

Sterling recovered above the $1.35 level, attempting to claw back from its weakest point in a month, as the US dollar eased following the US Supreme Court ruling overturning President Donald Trump’s broad emergency tariffs. Investors also digested strong UK economic data. The latest S&P Global UK PMI showed private-sector activity expanded in February at its fastest pace since April 2024, led by robust growth in both manufacturing and services. Retail sales surprised to the upside in January, rising 1.8% month-on-month including fuel and 2% excluding fuel. Meanwhile, public sector net borrowing posted a £30.4 billion surplus, the highest monthly surplus on record, well above forecasts and exceeding projections from the OBR. For the week, however, sterling was still on track for a more than 1% loss against the USD, pressured by Fed minutes showing policymakers remain divided on the interest-rate outlook, signaling potential challenges for the next Chair in implementing rate cuts.