Published by Global Banking & Finance Review®
Posted on March 21, 2025
2 min readLast updated: January 24, 2026
Add as preferred source on Google
Sterling declines against the dollar but is set for a weekly gain after the BoE meeting, amid concerns over global trade tensions and economic forecasts.
By Yadarisa Shabong
(Reuters) - The British pound extended its decline against the dollar on Friday but was poised to end the week higher, a day after the Bank of England kept interest rates unchanged and raised concerns about a rise in global trade tensions.
Sterling was down 0.2% at $1.29405 after hitting as high as $1.301 earlier this week. It was on track for its third-consecutive week of gains.
Against the euro, the British currency was little changed at 83.695 pence to the common currency.
On Thursday, BoE governor Andrew Bailey, echoing other central bankers around the world, highlighted the sudden lack of visibility about the outlook due largely to U.S. President Donald Trump's tariffs against global trading partners.
"There's just a general sense of caution. We don't really know what are the implications of the trade war on growth and inflation," said Kenneth Broux, head of corporate research FX and rates at Societe Generale.
Even though Britain has so far escaped most of the tariff rhetoric from Trump, the next round of U.S. reciprocal tariffs in early April and their potential implications and spillover to the UK economy remain to be seen, Broux said.
Upcoming UK inflation and wage growth data are the key things to watch, Broux said.
The UK economy is also at risk of rising inflation as a tax hike for employers kicks in next month.
The BoE predicted a peak in British inflation of 3.75% in the third quarter of this year, up slightly from a February estimate of 3.7%. It nudged up its estimate for economic growth in the first three months of 2025 to 0.25% from 0.1%.
Meanwhile, data on Friday showed that Britain borrowed a lot more than expected last month, underlining the scale of the challenge facing finance minister Rachel Reeves, who is expected to announce cuts to her spending plans next week.
(Reporting by Yadarisa Shabong in Bengaluru, Editing by William Maclean)
The article discusses the British pound's performance and the Bank of England's recent meeting amid global trade tensions.
The BoE's decision to keep interest rates unchanged contributed to Sterling's decline, but it remains on track for a weekly gain.
Concerns include global trade tensions, potential US tariffs, and rising UK inflation.
Explore more articles in the Finance category
