The Pound declined against the Euro but gained against the Dollar on Friday, as traders shifted away from US assets and sought safe-haven currencies amid the growing global trade conflict.
Meanwhile, stronger-than-expected UK GDP data had little impact on the market.
At the time of writing, Sterling was up 1% against the Dollar, trading at $1.30950, and down 0.5% against the Euro at 0.8675.
Intense selling of the greenback has caused it to fall against a variety of currencies, reflecting waning investor confidence in the US economy.
Whereas safe-haven currencies like the Swiss Franc and Euro have reached multi-year highs as traders move away from US assets, Reuters reports.
Indeed, the Dollar fell to 0.81150 Swiss Francs in early European trading, its lowest level since January 2015, extending a nearly 4% drop from Thursday.
“The story with Sterling it is more sensitive to risk sentiment than the Euro … and it’s less liquid than the Euro, in general it makes sense in these conditions to have Euro/Sterling move higher. When it comes to cable, it is just a Dollar story,” according to Francesco Pesole, FX strategist at ING.
Furthermore, earlier on Friday, official data revealed that the UK economy grew in February, marking its fastest expansion in 11 months and surpassing economists’ expectations.
However, the Pound saw little movement as focus remained on tariff-related news, particularly after China imposed additional tariffs on the US on Friday morning, escalating the ongoing trade war.
Another factor putting pressure on the Pound is the gilt market, according to Pesole.
“At a moment where bond market instability is driving outflows from the US Dollar in the US, markets are looking at bond market instability in the UK,” he said.
Thirty-year gilt yields dropped by 16.8 basis points on Thursday, marking their largest daily decline in over two years, but on Friday, they resumed the upward trend that began after Trump’s tariffs shook the markets.