By Yadarisa Shabong
(Reuters) – Sterling held steady against the dollar on Monday as Britain hopes to negotiate a deal with the U.S. to avoid President Donald Trump’s broader round of reciprocal tariffs this week.
British Prime Minister Keir Starmer and Trump discussed “productive negotiations” towards a UK-U.S. economic prosperity deal in a phone call on Sunday evening, a Downing Street spokesperson said.
The currency steadied at $1.2936 against the greenback and at 83.665 pence per euro.
Economists expect Britain to be less impacted by Trump’s tariffs due to the country’s more balanced trading position with the United States.
That has helped the pound gain more than 2.8% against the U.S. dollar in March, keeping it on track for its best month since November 2023.
Against the euro, however, sterling is set for a monthly decline of roughly 1.4% as the European shared currency rallied on the back of Germany’s massive spending plans and fiscal reforms.
Markets await details of Trump’s reciprocal tariffs against U.S. trading partners on Wednesday, with Trump saying late on Sunday that essentially all countries will be impacted.
Trump said on Friday he was open to carving out deals with countries seeking to avoid U.S. tariffs, but those agreements would have to be negotiated after April 2.
Britain is facing the impact from Trump’s tariffs on steel and aluminium which came into force this month and on autos imported into the United States set to be effective on April 3.
“There is some stress, but overall, because …the U.S. runs a trade surplus with the UK according to U.S. data, there is perhaps this perception that the UK, from a political point of view, won’t be embroiled in a trade war in the same sort of scale as the EU,” said Jane Foley, head of FX strategy at Rabobank.
The European Union delayed its first counter-measures against the United States over Trump’s metals tariffs until mid-April, allowing it to re-think which U.S. goods to target and offering extra weeks for negotiations.
(Reporting by Yadarisa Shabong in Bengaluru; Editing by Amanda Cooper and Ed Osmond)
