The Pound has surged to a seven-month high against the US Dollar, indicating increasing market jitters and doubts about the stability of the US currency. A combination of economic concerns and sharp criticism from Donald Trump directed at Federal Reserve Chairman Jerome Powell has renewed fears over the potential undermining of central bank independence.
As a result, the Dollar slumped to three-year lows, while the Pound surged above the 1.3400 mark, reports currencynews.co.uk. The euro also strengthened, reaching 41-month highs above 1.1550, while gold hit a new record. US equity futures showed signs of decline as markets responded to the heightened uncertainty.
MUFG analysts warned that any further moves to challenge Mr Powell’s position could provoke significant market volatility, particularly in foreign exchange markets.
Stephen Innes from SPI Asset Management noted that the reputational damage to the US as a global leader is now undeniable, with investors and central banks factoring in the growing instability of US policy.
Mr Trump’s continued attacks on Mr Powell – including branding him “Mr Too Late” and a “major loser” – have deepened concerns about the political influence over monetary policy, further undermining confidence in the Dollar.
Trade tensions with China also contributed to the Dollar’s decline, as Beijing’s harsh rhetoric escalated and undermined investor sentiment.
Mr Trump’s focus on tariffs and domestic taxation has made it more difficult for the US to secure beneficial trade agreements, further impacting the Dollar’s standing on the global stage.
Commenting, Stephen Innes of SPI Asset Management, said: “The dollar is slipping on more than just thin liquidity and soft data — it’s slipping on faith.
“Markets are starting to question one of the bedrock assumptions behind the dollar’s reserve currency status: an independent, inflation-fighting Fed.
“With President Trump ramping up public pressure on Powell to slash rates “now,” we’re not just flirting with jawboning — we’re staring down the barrel of a credibility unwind.”
The weakness was not just about economic cracks forming, Mr Innes stressed.
He explained: “This is a broader confidence bleed. Trump’s rhetoric signals that even the White House is front-running a slowdown. And that means the usual fallback narrative — ‘we’re strong, the Fed has our back’ —is starting to fray.
“The Easter Monday dollar dump was no fluke.
“It was a clean sweep: rate expectations got repriced, and the dollar’s safe-haven mantle took a hit.”
The pound was valued at just under $1.34 as of 10am.