No Trump tariff threat in the UK Pound unexpectedly becomes a safe haven in the market

On February 3, the pound unexpectedly became a safe-haven currency at a time when global financial markets were nervous over U.S. President Donald Trump’s trade tariffs. While the pound fell against the dollar on Monday, it largely outperformed all major currencies except the traditional safe-haven currency, the Japanese yen. The pound is set to rise against the euro for the eighth consecutive trading day, the longest rising streak since 2021. At a time when the UK market is off to a poor start to the year, Trump appears to have saved the UK from the threat of tariffs for the time being. He said the trade relationship between the two countries was “inappropriate” but “solvable”. At the same time, the UK is rebuilding its relationship with the EU, potentially easing trade barriers linked to Brexit for years. “The pound outperformed because the Trump administration freed Britain from the threat of tariffs,” said Elias Haddad, a strategist at Brown Brothers Harriman. “A warmer relationship between the UK and the EU could lead to a more favourable outlook for UK business investment, which bodes well for both the pound and UK financial markets.”