Pound Rises as Investors Flee Dollar Amid Escalating Trade War – Market Update

By: Aditi

Published on: Apr 07, 2025

Key Takeaways:

• Pound gains against the dollar as investors abandon the greenback amid recession fears.


• Gold prices retreat from all-time highs as traders take profits.


• Oil prices plunge on escalating US-China trade tensions and recession risks.


• Global stock markets tumble, with the FTSE 100 down 5% amid heightened volatility.

Pound Strengthens as Investors Dump the Dollar

The British pound (GBP/USD) edged higher in early European trading, rising 0.1% to $1.2915, as investors moved away from the US dollar amid growing concerns over a potential US recession.

The dollar index (DXY), which measures the greenback against a basket of major currencies, fell 0.7% to 102.32, reflecting a broader shift toward safe-haven assets like the Japanese yen (JPY) and Swiss franc (CHF).

Why Is the Dollar Falling?

• Trade War Fears: The US-China trade conflict has intensified, with new tariffs sparking fears of a global economic slowdown.


• Investor Flight from US Assets: Analysts note a trend of capital outflows from US markets as traders seek diversification.


• Recession Risks: The US economy faces mounting pressure, leading to reduced demand for the dollar.

Tony Sycamore, market analyst at IG, warned:

“If there isn’t some sort of walking back of the announcements, we’re heading for a liquidity event where money gets sucked out of markets.”

Meanwhile, sterling weakened against the euro (GBP/EUR), falling 0.4% to €1.1708, as European markets also grappled with uncertainty.

Gold Prices Pull Back from Record Highs

Gold (GC=F), traditionally a safe-haven asset, retreated from its all-time highs as traders locked in profits.

• Gold futures fell 0.1% to $3,032.80 per ounce.


• Spot gold declined 0.5% to $3,024.06.

Despite the dip, analysts remain bullish on gold’s long-term prospects:

• Bank of America forecasts gold could hit $3,500/oz in two years.


• Goldman Sachs sees gold reaching $3,300/oz by end of 2025.

Suki Cooper, Standard Chartered analyst, explained:

“Gold often sells off after a risk event because it’s used to cover margin calls. But the long-term outlook remains strong.”

Oil Prices Extend Losses on Recession Fears

Crude oil prices plunged further as escalating trade tensions between the US and China fueled fears of reduced global demand.

• Brent crude (BZ=F) dropped 3.4% to $63.04/barrel.


• WTI crude (CL=F) fell 4.5% to $59.19/barrel.

Why Are Oil Prices Falling?

1. Trade War Escalation: China’s retaliatory tariffs have deepened market anxiety.


2. Recession Concerns: A global economic slowdown could reduce oil demand.


3. OPEC+ Policy Uncertainty: The cartel’s production decisions remain a key factor.

Vandana Hari, founder of Vanda Insights, noted:

“It’s hard to see a floor for crude unless the panic in markets subsides.”

ING analysts revised their 2025 oil forecast, expecting Brent to average $72/barrel\ast \ast ,downfrom\ast \ast$74.

Global Stock Markets in Turmoil

The FTSE 100 (^FTSE) plummeted 5% to 7,651 points, mirroring declines across global markets:

• Dow Jones (^DJI) fell 5.5%.


• S&P 500 (^GSPC) dropped 5.97%.


• Nasdaq (^IXIC) lost 5.82%.

Donald Trump’s latest tariffs have triggered a market meltdown, with investors bracing for further volatility.

Conclusion: What’s Next for Markets?

• Pound vs. Dollar: GBP/USD may rise further if dollar weakness persists.


• Gold Outlook: Short-term pullback possible, but long-term bullish trend intact.


• Oil Prices: Further declines likely unless trade tensions ease.


• Stock Markets: High volatility expected until trade war risks subside.

For real-time updates, follow our live market coverage here.

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Key Takeaways:

• Pound gains against the dollar as investors abandon the greenback amid recession fears.


• Gold prices retreat from all-time highs as traders take profits.


• Oil prices plunge on escalating US-China trade tensions and recession risks.


• Global stock markets tumble, with the FTSE 100 down 5% amid heightened volatility.

Pound Strengthens as Investors Dump the Dollar

The British pound (GBP/USD) edged higher in early European trading, rising 0.1% to $1.2915, as investors moved away from the US dollar amid growing concerns over a potential US recession.

The dollar index (DXY), which measures the greenback against a basket of major currencies, fell 0.7% to 102.32, reflecting a broader shift toward safe-haven assets like the Japanese yen (JPY) and Swiss franc (CHF).

Why Is the Dollar Falling?

• Trade War Fears: The US-China trade conflict has intensified, with new tariffs sparking fears of a global economic slowdown.


• Investor Flight from US Assets: Analysts note a trend of capital outflows from US markets as traders seek diversification.


• Recession Risks: The US economy faces mounting pressure, leading to reduced demand for the dollar.

Tony Sycamore, market analyst at IG, warned:

“If there isn’t some sort of walking back of the announcements, we’re heading for a liquidity event where money gets sucked out of markets.”

Meanwhile, sterling weakened against the euro (GBP/EUR), falling 0.4% to €1.1708, as European markets also grappled with uncertainty.

Gold Prices Pull Back from Record Highs

Gold (GC=F), traditionally a safe-haven asset, retreated from its all-time highs as traders locked in profits.

• Gold futures fell 0.1% to $3,032.80 per ounce.


• Spot gold declined 0.5% to $3,024.06.

Despite the dip, analysts remain bullish on gold’s long-term prospects:

• Bank of America forecasts gold could hit $3,500/oz in two years.


• Goldman Sachs sees gold reaching $3,300/oz by end of 2025.

Suki Cooper, Standard Chartered analyst, explained:

“Gold often sells off after a risk event because it’s used to cover margin calls. But the long-term outlook remains strong.”

Oil Prices Extend Losses on Recession Fears

Crude oil prices plunged further as escalating trade tensions between the US and China fueled fears of reduced global demand.

• Brent crude (BZ=F) dropped 3.4% to $63.04/barrel.


• WTI crude (CL=F) fell 4.5% to $59.19/barrel.

Why Are Oil Prices Falling?

1. Trade War Escalation: China’s retaliatory tariffs have deepened market anxiety.


2. Recession Concerns: A global economic slowdown could reduce oil demand.


3. OPEC+ Policy Uncertainty: The cartel’s production decisions remain a key factor.

Vandana Hari, founder of Vanda Insights, noted:

“It’s hard to see a floor for crude unless the panic in markets subsides.”

ING analysts revised their 2025 oil forecast, expecting Brent to average $72/barrel\ast \ast ,downfrom\ast \ast$74.

Global Stock Markets in Turmoil

The FTSE 100 (^FTSE) plummeted 5% to 7,651 points, mirroring declines across global markets:

• Dow Jones (^DJI) fell 5.5%.


• S&P 500 (^GSPC) dropped 5.97%.


• Nasdaq (^IXIC) lost 5.82%.

Donald Trump’s latest tariffs have triggered a market meltdown, with investors bracing for further volatility.

Conclusion: What’s Next for Markets?

• Pound vs. Dollar: GBP/USD may rise further if dollar weakness persists.


• Gold Outlook: Short-term pullback possible, but long-term bullish trend intact.


• Oil Prices: Further declines likely unless trade tensions ease.


• Stock Markets: High volatility expected until trade war risks subside.

For real-time updates, follow our live market coverage here.