It was observed in global currency markets that the British pound had reached a seven-month high against the U.S. dollar on Tuesday, a movement largely driven by growing concerns surrounding the autonomy of the U.S. Federal Reserve. These concerns were believed to have emerged after President Donald Trump’s verbal criticisms of Federal Reserve Chair Jerome Powell, raising questions about the central bank’s independence and triggering broad weakness in the U.S. currency.
Sterling was reported to have climbed to $1.3423 during intraday trading, its highest value since late September. By the close of the day, it was indicated to have settled at approximately $1.3380, registering a modest increase of 0.01%. Currency strategists noted that the dollar had broadly declined not only against the pound but also against other major currencies such as the Japanese yen, the euro, and the Swiss franc, amid investor fears that political interference could undermine the credibility of U.S. monetary policy.
Speculation regarding potential action against the Fed Chair was heightened after it had been confirmed that White House economic adviser Kevin Hassett mentioned the administration would be reviewing the situation. When asked whether the option of removing Jerome Powell from his position was under consideration, it was stated that the matter would be evaluated, thereby adding to the uncertainty surrounding the future of U.S. monetary leadership.
As a result of these developments, the dollar was seen trading near multi-year lows versus the euro and the Swiss franc, while also touching fresh lows against the yen. Analysts suggested that investor confidence in the U.S. economic outlook had been shaken due to the political narrative, prompting a broad sell-off in dollar-denominated assets and a shift toward alternative currencies and safer havens.
Although the pound had strengthened against the dollar, its performance against the euro was reported to be mixed. Sterling was said to have declined versus the single European currency, although it remained comfortably above the five-month low that had been recorded earlier in the month. The euro was perceived to be benefiting from the flight from U.S. assets, which was attributed to shifting global sentiment following the American administration’s policy stances.
Amid these movements, market participants had also been closely monitoring domestic economic indicators in the United Kingdom. It was reported that the recent inflation figures and labour market data had introduced some caution into the outlook for sterling. According to analysts, inflation in the UK had slowed to its weakest level in three months as of March, while the labour market had shown signs of weakness in anticipation of a planned tax increase on employers.
It was further reported that sterling had shown limited response to the two key economic reports released in the previous week. Nevertheless, the underlying sentiment suggested that the UK currency could face headwinds in the months ahead if monetary policy became more accommodative in response to softening inflation and a cooling labour market.
The broader implications of the currency movements were believed to reflect not only the relative strength or weakness of the respective economies but also investor sensitivity to political developments. The dollar’s decline was largely attributed to the perceived erosion of central bank independence, a principle regarded as fundamental to economic stability and investor trust.
In this evolving context, it was expected that global foreign exchange markets would continue to be shaped by both domestic economic indicators and political discourse in the United States. Traders and institutional investors were advised to remain attentive to central bank communications, fiscal policy announcements, and geopolitical developments, all of which were anticipated to influence capital flows and exchange rate dynamics in the foreseeable future.
Overall, while the British pound had found support against the U.S. dollar due to dollar weakness, its trajectory in the coming months was likely to depend on the evolving macroeconomic landscape in the UK and the extent to which central bank policies would respond to emerging economic pressures.
