Published by Global Banking & Finance Review®
Posted on February 23, 2026
3 min readLast updated: April 2, 2026
Add as preferred source on GoogleSterling vs dollar ticked higher as traders weighed fallout from a US tariff ruling and fresh levy plans. Political risk from Manchester’s by-election and upcoming BoE testimony keeps rate-cut bets alive.
By Niket Nishant
Feb 23 (Reuters) - The British pound kicked off the week on a firmer footing on Monday, as traders digested the fallout from the U.S. Supreme Court striking down tariffs and political uncertainty from an upcoming election to fill a parliamentary seat.
Sterling rose 0.2% to $1.3506, helped in part by a broadly softer dollar. The pound was also up 0.1% against the euro at 87.34 pence.
Over the weekend, U.S. President Donald Trump announced a new levy of 15% on all imports after the Supreme Court on Friday ruled against his global tariffs.
For the UK, this would be an increase from 10% and renewed tariff uncertainty could weigh on sentiment.
"The full implications are as yet unclear. However, this is far from being the end of the tariff story," said Rathbones' head of market analysis John Wyn Evans.
High U.S. import tariffs appear to be here to stay and the full impact is likely to take "many years" to be felt, Bank of England policymaker Alan Taylor said on Monday.
BoE Governor Andrew Bailey's appearance before the parliamentary Treasury Committee later this week is also in focus.
The BoE left rates unchanged earlier this month after a narrowly split vote. Money markets price in a roughly 75% chance of a quarter-point rate cut in March.
Expectations of easing have also picked up pace after data last week showed that the UK's jobless rate rose in the fourth quarter of last year, while inflation in January hit its lowest since March 2025.
POLITICAL UNCERTAINTY IN FOCUS
Manchester's Gorton and Denton constituency is set to hold a special election to fill a vacated parliamentary seat on Thursday in what is shaping up to be a key test for UK Prime Minister Keir Starmer and his Labour Party.
Sliding poll numbers and anger over allegations that his chosen U.S. ambassador, Peter Mandelson, once leaked government information to late sex offender Jeffrey Epstein, have given an edge to his rivals. Mandelson denies the allegations.
"A heavy defeat for the ruling Labour Party could re-ignite speculation over the Labour leadership and again weigh on sterling," said ING's FX strategist Francesco Pesole.
The pound has weakened in recent weeks on concerns that a change in government could bring fresh uncertainty. [GBP/]
While Starmer has so far staved off challenges to his leadership, the odds of him leaving office by year-end have jumped 12 percentage points to 63% on Polymarket this month.
(Reporting by Niket Nishant; Editing by Dhara Ranasinghe and Peter Graff)
The article covers sterling’s rise against the dollar as traders assess US tariff developments and UK political risks ahead of the Manchester by-election and BoE testimony.
Tariff uncertainty can weaken the dollar if risk appetite falls, but it may also hurt UK trade sentiment. The net effect on GBP depends on how tariffs alter growth and inflation expectations.
A surprise result could amplify questions over Labour’s leadership and policy stability, influencing risk premia on UK assets and short-term moves in sterling.
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