Published by Global Banking & Finance Review®
Posted on January 28, 2026
2 min readLast updated: January 28, 2026
Add as preferred source on GoogleThe pound surged to a four-month high due to Trump's comments on the dollar, then retreated. Analysts attribute the movement to market reactions and economic data.
By Harry Robertson
LONDON, Jan 28 (Reuters) - The pound dipped on Wednesday after surging to a four-month high the previous day as comments from U.S. President Donald Trump deepened investors' concerns about the dollar.
Sterling was last down 0.44% at $1.3784. It rose more than 1.2% on Tuesday to $1.3867, its highest level since September 2021.
Trump said the value of the dollar is "great" when asked about its recent steep falls on Tuesday, adding to a sense among investors that the administration is happy with a cheaper currency, which makes U.S. exports more competitive.
The dollar index, which tracks the currency against its major peers, fell around 1.2% to its lowest since February 2022 on Tuesday at 95.57.
Analysts on Wednesday said the fall in the pound was a natural reaction after the steep rally the previous day and the 2.6% increase so far this year, which has been aided by stronger economic data in recent weeks.
"There's a little bit of taking stock," said Chris Turner, global head of markets at lender ING. "I think 0.4% (lower) is very small compared to the four big figures we've had over the last week," he said, referring to a rise of four cents in the pound.
The euro was little changed against the pound on Wednesday at 86.92 pence. It has fallen very slightly versus sterling this year.
The focus in currency markets has been firmly on the dollar, which has fallen 2.1% this year after dropping more than 9% in 2025.
Trump's erratic economic policymaking and pressure on the Federal Reserve to lower interest rates have weighed on the outlook for the currency, despite the relative strength of the U.S. economy.
Turner said signs that the United States and Japan could be coordinating to boost the yen against the dollar had been a key catalyst for the latest selling in the U.S. currency.
(Reporting by Harry RobertsonEditing by Ros Russell)
Currency hedging is a financial strategy used to reduce the risk of adverse price movements in foreign exchange rates. It typically involves using financial instruments like options or futures contracts.
Foreign currency refers to any currency that is not the domestic currency of a particular country. It is used in international trade and investment.
Financial markets are platforms where buyers and sellers engage in trading financial assets such as stocks, bonds, currencies, and derivatives.
The UK economy encompasses the economic activities and financial systems of the United Kingdom, including production, consumption, and trade.
Economic growth refers to the increase in the production of goods and services in an economy over a specific period, usually measured by GDP.
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