The pound sterling weakened against the dollar and euro on Monday as investors pulled back from risk-sensitive assets amid mounting fears of a global recession triggered by US President Donald Trump's latest tariff measures. The pound fell to a one-month low of $1.2825, down 0.5 per cent on the day, after losing 1.5 per cent on Friday—its sharpest single-day drop since March 2023. Against the euro, it declined to 85.38 pence and also lost ground to traditional safe havens like the Japanese yen and Swiss franc. Market nerves intensified after Trump warned foreign governments would need to pay "a lot of money" to reverse the sweeping tariffs, including a 10 per cent levy on UK goods, calling them "medicine" for trade imbalances. In response, investors raised bets on a Bank of England rate cut, with markets fully pricing in a 25-basis-point reduction in May by 1013 GMT. Despite initial resilience, the pound lost momentum as recession concerns sparked a global equity sell-off and increased demand for safer assets. "The messages suggest that President Trump is comfortable with the market reaction and that he's going to continue on this course," said Richard Flax, CIO at Moneyfarm. Separately, the UK government eased electric vehicle production demands on automakers on Monday, aiming to ease pressure on a sector rattled by the US tariff shock. Attribution: Reuters Subediting: M. S. Salama
