The pound advanced against the dollar (GBPUSD=X) on Thursday morning, up 0.1% to $1.3253 at the time of writing, following a number of US tariff announcements ahead of president Donald Trump's extended deadline for agreeing trade deals on Friday.
The US dollar index (DX-Y.NYB), which tracks the greenback against a basket of six currencies, was little changed at 99.74.
Trump announced a trade deal with South Korea on Wednesday evening that will see the US place 15% tariffs on imports from the country.
Earlier on Wednesday, the president made other moves on tariffs, including threatening a 25% levy on goods from India and slapping massive 50% duties on imports from Brazil. Trump also suggested that beginning 1 August, India could pay an additional penalty because of its ties with Russia.
In addition, the president announced a 50% tariff on copper pipes and wiring that will also come into place on Friday.
Investors were also digesting the Federal Reserve's decision on Wednesday to keep interest rates on hold in the range of 4.25% to 4.5%.
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Jim Reid, a market strategist at Deutsche Bank (DBK.DE), said: “The prepared statement saw a modest downgrade to the language on growth, but Powell’s press conference leaned more hawkish as he painted a picture of a solid US economy with a labour market that is in balance.
“While the Fed chair acknowledged that a ‘reasonable base case' was that the impact of tariffs on prices would be a one-time shift, he noted the risks that it could be more persistent.
“Powell declined to be drawn on what data would justify a September cut. Our US economists note that Powell avoided potential dovish hints, not emphasising slowing services inflation and downplaying any signals from payrolls weakness.”
He added that Deutsche Bank's US economists still expect the next rate cut to be announced in December.
In other currency moves, the pound was little changed against the euro (GBPEUR=X) on Thursday morning, trading at €1.1581 at the time of writing.
Gold prices ticked higher on Thursday morning, as investors weighed tariff concerns against strong economic data out of the US.
Gold futures (GC=F) rose 0.3% to $3,304 per ounce at the time of writing, while spot gold was up 0.9% to $3,306.13 per ounce.
Data released on Wednesday showed that the US economy grew by 3% in the second quarter, ahead of the 2.6% expected by economist surveyed by Bloomberg. This marked a rebound after the US economy contracted for the first time in three years to start 2025.
