The GBP/USD currency pair settled below Friday’s high of 1.3144, its strongest level since April 3rd, as escalating trade tensions and rising concerns over a wider economic fallout for the US have shaken confidence in US assets, weighing on the greenback.

At the same time, stronger-than-expected UK GDP growth data provided support to the Sterling.

The US Dollar losses across the board came after the latest developments on the tariff front. China’s finance ministry said on Friday that it would raise tariffs on US imports to 125% from April 12th, from the previously announced 84%.

The decision was a direct response to the Trump administration’s cumulative tariff rate of 145% on Chinese imports.

The fluctuating stance on tariffs emanating from Washington has seemingly eroded confidence in the US Dollar as a reliable store of value in times of stress and led to fund flows into other markets.

The yield on benchmark US 10-Year Treasuries settled above 4.49%, having reached 4.592% on Friday, or the highest since February 13th. The 10-year bond yield went up 49.7 basis points this week to mark the sharpest weekly increase since 2001.

The latest macro data only added to the bleak outlook. The University of Michigan’s consumer sentiment index plummeted to its lowest level since 2022 in April, while 1-year inflation expectations rose to levels last seen in 1981.

Meanwhile, the UK economy grew 0.5% month-over-month in February, following zero growth in January. It has been the strongest monthly GDP increase since March 2024. Market consensus had pointed to a 0.1% growth.

Yet, Pound gains seemed limited as tariff developments will likely shape the outlook for the economy.

The Trump administration announced this week a 90-day pause on tariffs that exceed the 10% baseline for most of the United States’ trade partners.

However, the United Kingdom and many other US trade partners will still be subject to the baseline tariff of 10%.

Prior to the tariff pause, there had been growing concerns about the potential economic repercussions for the UK, given the importance of its trading relationship with the United States.

UK’s trade deficit in goods has increased to GBP 20.81 billion in February from GBP 18.22 billion in January, data by the Office for National Statistics showed.

The GBP/USD currency pair settled 0.89% higher at 1.3082 on Friday.

The major Forex pair gained 1.42% for the week.