LONDON (Reuters) – The pound was little changed on Wednesday, with global markets in limbo ahead of U.S. President Donald Trump’s long-awaited tariff announcement later in the day, which has the potential to further cool the already tepid UK economy.
Sterling was flat at $1.2921, around the level at which it has traded since mid-March. The euro was around 0.1% higher against the pound at 83.56 pence.
Trump is poised to impose sweeping new reciprocal tariffs on global trading partners on Wednesday in the White House’s Rose Garden at 2000 GMT (2100 BST).
Details about the size and scope of tariffs remain unknown, but the Washington Post reported on Tuesday that Trump’s aides were considering a plan that would raise duties on products by about 20% from nearly every country.
Tariffs could knock the UK economy and potentially wipe out the so-called headroom finance minister Rachel Reeves left against her fiscal rules at last week’s spring statement, according to the country’s budget watchdog.
Britain is still hopeful that any tariffs imposed by U.S. President Donald Trump will be reversed shortly if the two sides can agree the outline of a new economic partnership, its business minister said on Tuesday.
The UK has a more balanced trading relationship with the United States than long-standing Trump targets such as the European Union, China, Mexico and Canada.
“Trump explicitly opened to a trade deal with the UK in previous months, putting British exports at the front of potential exemptions should negotiations follow today’s announcement,” said Francesco Pesole, currency strategist at ING.
“The more markets will see room for the initial tariff announcement being watered down via negotiations, the more sterling can outperform the euro.”
The euro has risen slightly against the pound this year as investors have bet Germany’s overhaul of its spending rules will spur growth in the euro zone.
Sterling is up more than 3% against the dollar in 2025, however, as the U.S. currency has slipped on concerns that tariffs will dent growth in the American economy.
