Sterling rose for a third time and hit a two-week high against the dollar on Wednesday as a lack of clarity over US President Donald Trump’s plans for tariffs kept pressure on the greenback.
Sterling was up 0.1% at $1.2376, its highest level since January 8.
The pound initially fell more than 0.3% in early trade as data showing Britain borrowed more than expected in December weighed.
But uncertainty surrounding the Trump administration’s tariff policies has put pressure on the dollar since Monday, and the U.S. currency continued to trend broadly lower on Wednesday.
The pound has gained 1.6% since the start of the week.
Mr. Trump did not immediately impose tariffs on U.S. imports on his first day back at the White House, but he said he was considering tariffs of around 25% on Canada and Mexico and around 10% in China from February 1.
He also promised to impose tariffs on imports from the European Union, without giving further details.
Asked by reporters at the White House on Monday, Mr. Trump said he would impose universal tariffs on all imports into the United States: “We could do it. But we’re not ready for that yet.” .
-The euro rose 0.14% against the pound to 84.50 pence, after hitting its highest level since August on Monday at 84.73 pence.
Investor concerns about Britain’s financial outlook have fueled the pound’s fall of around 2% against the single currency since the start of the year.
“The outlook for a weaker UK economy and further easing from the Bank of England is still negative for sterling this year, although market concerns over UK public finances have eased sufficiently “, UniCredit analysts said in a note.
Markets currently price BoE rate cuts at around 65 basis points this year.
Britain recorded a larger-than-expected budget deficit in December, official data showed on Wednesday, underscoring the fiscal pressure facing Finance Minister Rachel Reeves.
Public sector net borrowing was 17.8 billion pounds ($22 billion), more than 10 billion pounds more than the previous year, the Office for National Statistics said.
(1 dollar = 0.8088 pounds)