The British pound held steady on Monday, poised to post its strongest monthly gain against the U.S. dollar since November 2023. The move reflects broad investor retreat from U.S. assets

throughout April.

Sterling rose 0.3% to $1.3345, putting it on track for a 3.1% gain this month. However, the pound has fared less well against the euro, which has climbed nearly 2% in April—its best monthly performance against sterling since December 2022, when it rose 2.4%.

The euro has benefited from a widespread shift away from the dollar, strengthening across most major currencies.

Earlier in the year, sterling’s resilience was underpinned by expectations that the Bank of England would be slower to cut interest rates than its peers. Market data now suggests traders anticipate about 85 basis points in rate cuts from both the BoE and the U.S. Federal Reserve by year-end.

More recently, sterling’s strength has stemmed from a broader search for alternatives to the dollar, as investors weigh risks tied to President Donald Trump's proposed tariffs.

The UK is seen as less vulnerable to these tariffs, particularly after Trump’s 90-day delay, which ends in early July. In 2024, the U.S. ran a $12 billion goods surplus with the UK, compared to large deficits with China ($300 billion) and the EU ($236 billion), according to the U.S. Trade Representative.

Given these dynamics, Barclays analysts remain optimistic on sterling, especially relative to the euro.

“The UK’s lower exposure to direct tariffs means less demand disruption,” they noted, “which helps offset the impact of more limited fiscal flexibility.”