The British pound (GBP) surged past the $1.29 mark in early London trading on Friday, gaining 0.2% and culminating a week of steady growth. On Thursday, the pound reached a four-month high against the US dollar. This impressive 2.4% rise over the past five trading sessions can be attributed to escalating geopolitical tensions surrounding President Trump’s tariff policies and ongoing negotiations to resolve the Ukraine-Russia conflict. These events have fueled demand for safe-haven currencies like the pound.
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Geopolitical Tensions and Safe-Haven Demand Bolster Pound
The US dollar index (DXY), which measures the greenback’s performance against a basket of major currencies, experienced a 0.2% decline, extending its month-on-month losses to 3.9%. Risk aversion among investors has driven them towards traditional safe havens like the Swiss franc and, increasingly, the British pound. Concerns over the potential economic fallout from President Trump’s trade protectionist policies, both domestically and internationally, have contributed to this trend.
Market analyst Neil Wilson at TipRanks highlighted the negative economic indicators emerging from the US: “Layoffs up, inflation up, consumer confidence down. The new Trump effect in action was clear to see.” He cited a significant increase in announced layoffs in February, coupled with rising inflation and declining consumer confidence. While US nonfarm payroll data is expected to show job growth, the overall economic picture remains uncertain, further strengthening the pound’s appeal as a safe haven.
Euro Gains Momentum on German Spending Plans
The euro also saw gains on Friday morning, appreciating 0.2% against the pound. This follows Thursday’s significant sell-off of the pound against the euro, the largest in five months, triggered by the new German government’s commitment to increased infrastructure and defense spending. This fiscal expansion, coupled with surging bond yields, has bolstered the euro’s exchange rate.
Gold Prices Remain Near Record Highs
Gold futures prices saw a minor dip on Friday but remained near all-time highs at $2,922 per ounce. The spot price of gold edged up 0.3% to $2,920. Investors are closely monitoring key economic data releases, particularly Friday’s US jobs report, for insights into the health of the US economy and its growth potential. Concerns about inflation and potential trade disruptions continue to support gold’s safe-haven appeal, especially with the dollar weakening.
Oil Prices Rebound After Recent Losses
Oil prices experienced a modest rebound on Friday after three consecutive days of decline. Concerns about slowing economic growth and its impact on demand had pushed oil to its lowest levels in nearly three years on Thursday. Both Brent crude and West Texas Intermediate (WTI) were poised for substantial weekly losses. As of Friday morning, Brent crude was up 0.8%, trading slightly above $70 per barrel, although still on track for a weekly loss of 4.4%. The market remains sensitive to global economic developments and their potential impact on energy demand.
