Sterling ticks higher as strong data, trade deal buffer against stronger dollar

(Reuters) -The pound ticked higher versus the dollar on Thursday, one of the few major currencies holding its ground against the greenback which earlier surged after a court blocked U.S. President Donald Trump from imposing import tariffs on other countries.

At 0942 GMT, the pound was up 0.12% against the dollar at 1.347. Elsewhere, the euro, Japanese yen and Swiss franc all fell versus the dollar.

Nevertheless the pound remains a fraction below the 1.359 level touched on Tuesday, its highest against the greenback since February 2022.

"Due to the court ruling that Trump’s tariffs are illegal, the pound has given back a chunk of gains made against the U.S. dollar," said George Vessey, lead FX & Macro Strategist at Convera in a note, though he added it remains above its 21-day moving average, a signal that a recent uptrend is still intact.

The pound has gained almost 8% against the dollar in 2025 and is on track for its fourth consecutive monthly rise, as investors react to uncertain U.S. trade policy.

It has also been boosted by strong data, including retail sales last week as well as the announcement of a UK-U.S. trade deal earlier this month.

"GBP has done well in recent weeks on the back of U.S. and EU trade/reset deals, above-forecast consumer spending and less crowded positioning," said Kenneth Broux, head of corporate research FX and rates at Societe Generale, also flagging that the market is pricing fewer Bank of England rate cuts.

Last week's inflation print led traders to scrap bets for a cut at the BoE's meeting scheduled for June, with more than 97% of traders now expecting the central bank to hold rates.

The central bank slashed the bank rate by 0.25 percentage points to 4.25% on May 8.

The Confederation of British Industry said on Thursday that business confidence in Britain's services sector hit a two-and-a-half-year low in the quarter to May.

Data from market researcher Kantar on Wednesday showed British grocery price inflation jumped to 4.1% for the four weeks to May 18, its highest level since February last year.

Against the euro, the pound was up 0.1% at 83.72, on track for its seventh straight week of gains.

(Reporting by Lucy Raitano; Editing by David Holmes)