GBP/USD Soars Toward 1.34 as US-UK Trade Deal Nears Finish Line—Just in Time for Another Brexit Headache
The pound flexes its muscles against the dollar as negotiators finally stop arguing over chlorinated chicken and NHS privatization—because nothing says ’special relationship’ like haggling over poultry disinfectants.
Sterling’s rally comes as both sides scramble to ink the deal before the next political crisis inevitably derails progress. Because if there’s one thing markets love, it’s stability wrapped in uncertainty.
Traders cheer the breakthrough, ignoring the fact that 90% of modern forex moves are just algorithms reacting to other algorithms. Meanwhile, the Bank of England quietly updates its ’post-Brexit bingo card’ with another square marked ’done.’
GBP/USD Chart Daily – Sterling Climbs Despite Domestic Headwinds
Over the past week, GBP/USD broke above 1.3443, marking its highest level since early 2022 and topping its 2024 highs. However, as the US dollar regained some ground late in the week, the pair eased slightly, closing just under 1.33.
Still, momentum returned swiftly at the start of this week, with the pound surging more than a cent intraday to touch 1.3401. This strength comes in the face of discouraging domestic data: the UK’s final April services PMI reaffirmed the sector remains in contraction territory, underscoring a sluggish post-pandemic recovery.
Trade Deal Expectations Drive Risk Appetite
What’s fueling sterling’s resilience is a potential breakthrough on the trade front. market sentiment improved sharply after reports surfaced, including from the Financial Times, that US and UK negotiators are nearing a deal that would roll back long-standing steel and auto tariffs originally imposed during the Trump administration. The proposed agreement includes lower tariff quotas for British steel and vehicles entering the US, and possible reductions in duties on American agricultural imports heading to the UK.
For its part, Britain is reportedly prepared to adjust certain elements of its digital services tax and to ease duties on US exports. However, the UK maintains firm resistance to US food production standards—most notably rejecting chlorine-washed poultry—highlighting the delicate balance between regulatory sovereignty and economic pragmatism.
Industry Relief Could Be in Sight
Key UK industries, especially high-end automotive brands like Jaguar Land Rover and Bentley can see some relief in the form of revised quotas or duty rollbacks could offer these exporters a badly needed boost, helping to offset the broader domestic slowdown. Market participants are watching closely to see if the UK can clinch the deal before India, a move that would underscore Britain’s renewed focus on bilateral trade partnerships in the post-Brexit era.
With the GBP/USD pair once again approaching the 1.34 threshold, traders appear to be betting that a formal agreement—possibly to be unveiled in the coming days—could spark the next leg higher for sterling.
