POUND Sterling is up to its best level against the US Dollar since July 2025 as America’s economy is battered by a storm.
The Pound is currently trading at $1.37 which is its best level since July last year – if it reaches $1.38 then it will be the highest since October 2021.
Experts said it is due to a combination of Winter Storm Fern, expectations of lower US interest rates later this year, Donald Trump causing geopolitical uncertainty and the price of gold and silver being high.
Winter Storm Fern could shave up to 1.5% off US quarter one Gross Domestic Product (GDP) growth.
Heavy snow and ice hit across the United States over the weekend, leaving nearly 600,000 homes without power and leading to thousands of flight cancellations.
Tony Redondo, Founder at Newquay-based Cosmos Currency Exchange, said now is a good time to buy Dollars and head to the US on holiday.
He added: “US Dollar buyers are seeing the best GBP/USD rates since July 2025. UK shop price inflation rose to 1.5% in January, signalling the Bank of England may keep interest rates higher for longer to hit its 2% target.
“This supports the Pound while the US economy faces a setback as Winter Storm Fern could shave up to 1.5% off US Q1 GDP growth. British holidaymakers heading to the US and importers of American goods now have increased purchasing power. UK investors also get better value when buying US assets.
“Conversely, UK exporters suffer as their goods become more expensive for Americans, and FTSE 100 firms with massive US revenues will see those profits shrink when converted back to a stronger Pound. Ultimately, the market’s direction depends on UK inflation trends and the speed of the US recovery from the storm.”
Markets have favoured alternative hedges
Prem Raja, Head of Trading Floor at Currencies 4 You, laid out the reasons for why the Dollar is struggling.
He continued: “Sterling has pushed to multi-month highs against the US Dollar, trading around 1.37, driven by a combination of cyclical and structural factors. The dominant theme has been the re-emergence of the ‘short US’ trade, with investors increasingly positioning for a weaker Dollar through 2026.
“Expectations of lower US interest rates later this year have reduced the Dollar’s yield advantage, while persistent geopolitical uncertainty and renewed tariff rhetoric have added further pressure. Rather than seeking safety in the Dollar, markets have favoured alternative hedges, notably gold and silver, which have seen strong inflows.
“In contrast, the Pound has benefited from relatively stable UK data and a perception that UK rate cuts may be more measured. While near-term corrections are always possible, the broader balance of risks suggests the Dollar could remain on the defensive, keeping GBP/USD supported as the year progresses.”
The Dollar is weak
Samuel Mather-Holgate, Managing Director & IFA at Swindon-based Mather and Murray Financial, said now is not the time to celebrate the Pound data.
He added: “The Dollar is weak, but that doesn’t mean the Pound is strong. If you compare Sterling to the Euro it’s clear the position doesn’t look so good, and our European neighbours is who we should be benchmarking our economy against. At present, it’s more expensive holidays and imports from abroad unless you fancy a trip across the pond.
David Belle, Founder and Trader at Fink Money, said the price of gold and silver goes some way to explaining the weaker Dollar.
He continued: “The weaker Dollar is likely due to everyone buying metals which are predominantly traded in US Dollar.
“It means if you buy gold or silver, you’re effectively shorting the Dollar. This depresses the Dollar even if there isn’t any actual extra demand for Sterling which means GBP/USD still rises.”
