Sterling steadied against the dollar on Wednesday, holding below four-month highs hit in the previous session, as Britain held back from retaliating against U.S. tariffs on steel and aluminium imports, avoiding tit-for-tat moves.
The pound was little changed at $1.2943 after hitting $1.29655 on Tuesday, its highest since November 8.
Britain’s government said on Wednesday it was disappointed with President Donald Trump’s decision to impose tariffs on steel and aluminium imports but did not follow the European Union in retaliating.
Britain was hoping to secure an exemption and dodge the U.S. tariffs on its steel sector, which is small but produces specialist products for defence and other sectors. Trump said last month the two countries might reach a bilateral trade deal that would avert duties.
Sterling has gained more than 6% against the dollar since Trump took office in January, helped by Britain’s largely balanced trade position with the U.S.
Sterling regains footing against weak dollar, tumbles versus euro
Against the euro, however, the pound has had a poor run as the European currency has been buoyed by Germany’s fiscal reset plan, which has lifted bund yields.
The euro was little changed at 84.325 pence at 1100 GMT.
The pound is following the dollar and the euro, said Kenneth Broux, head of corporate research FX and rates at Societe Generale.
“It’s not driving the bus, it’s a passenger on the bus,” Broux said.
The euro has gained more than 2% on the pound this month, and is set for its best monthly gain since December 2022. The euro is also on course to snap five-straight quarterly losses, with a 1.9% climb so far this quarter.
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