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"The Dollar is back" in a welcome de-escalation in the trade war

ended 12. May 2025

The Dollar is rising and the Pound is under pressure this morning following the announcement of a 90-day pause that will see tariffs between China and the US reduced by 115%. Newspage asked forex and investment experts for their views, below.

5 responses from the Newspage community

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Tony Redondo
Founder at Cosmos Currency Exchange
The Dollar is back. The 90-day pause on US-China tariffs, reducing them by 115% from 145% to 30% for Chinese goods entering the US, and from 125% to 10% for US goods entering China, signals a welcome de-escalation in the trade war. Markets are reacting positively with the Dollar rallying to a 4-week high against the Pound, reflecting renewed confidence in US economic stability. Global stocks may see gains, as seen in prior tariff pauses when the S&P 500 soared 9.5% on the 9th of April. With this morning’s domestic news showing UK employer confidence down to pandemic lows and employment, wages, GDP, and industrial production due out this week, we could see further pressure on the Pound.
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Harry Mills
Director at Oku Markets
Sterling was the second-best-performing G10 currency vs the US Dollar last week, but the Dollar is resurgent in early trading thanks to the announcement of a 90-day pause to triple-figure tariffs on both sides of the US-China trade war. The United States has cut tariffs on Chinese goods to 30% from 145%, while China has cut tariffs on US goods to 10% from 125%. The US Dollar gained more than 1% when measured against a basket of currencies, with the pound falling by 0.92% before recovering around a third of these reactionary losses. The Bank of England's somewhat hawkish tilt (in the voting dissent) lent support for the Pound at the back end of last week, allowing sterling to outperform the euro. If the wind continues to blow in the direction of the Dollar, the Pound may test $1.31 and potentially extend losses below $1.30.
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Gabriel McKeown
Political & Economics Writer at Sad Rabbit - Substack Newsletter
The ninety‑day armistice in the tariff war has ignited the greenback, pushing sterling to the sidelines as tit‑for‑tat levies are slashed by a staggering 115% in the interim. Sterling’s predictable underperformance as a consequence highlights how Britain’s current‑account deficit of around 3% leaves the pound hostage to global capital rotations whenever US assets regain their lustre. However, this is very much a short-term move, with the 90‑day pause window buying negotiators time but scarcely expected to resolve the structural frictions over intellectual‑property protection, state subsidies, and data flows. A failure of these negotiations could see the tables turn once again, with the only certainty being uncertainty at this stage.
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David Belle
Founder and Trader at Fink Money
This is a consequence of the recent sell-off in US equities. British investors would have sold Dollars to repatriate to Sterling leading to higher Sterling but as the trade is reversed and they want to be overweight US equities again, the flow goes back to the Dollar and into US assets. The recent Bank of England rate cut will add further path of least resistance to the downside for cable.
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Prem Raja
Head of Trading Floor at Currencies 4 You
Sterling has fallen against the US Dollar from 1.33 down to 1.31 over the past two weeks. This has mainly been the consequence of renewed confidence in US markets due to trade deals getting done and, most recently, the agreement between the U.S and China. As the market turns more risk on, it is natural that we will see investors buy Dollars to invest back into US equities.