Pound Surges to 5-Month High vs. US Dollar Amid Tariff Volatility: Gold, Oil Prices, and Currency Markets in Focus

By: Aditi

Published on: Mar 17, 2025

The British pound soared toward a five-month high against the US dollar on Monday, fueled by escalating tariff tensions and growing fears of a US economic slowdown. Meanwhile, gold prices hovered near record highs, and oil markets braced for supply disruptions amid renewed Middle East conflicts. Here’s a breakdown of the key drivers shaping currency and commodity markets on March 17.

Pound Strengthens as US Dollar Stumbles Under Tariff Pressures

The GBP/USD exchange rate climbed to $1.2938, its highest level since October 2024, as the US dollar extended losses triggered by President Donald Trump’s aggressive tariff policies. The US dollar index (DXY), which measures the greenback against six major currencies, has plunged nearly 6% from its January peak, reflecting investor anxiety over a potential recession.

Key Data:

• GBP/USD (GBPUSD=X): +0.26% to $1.2961 (as of 12:38 PM GMT)


• US Dollar Index (DX-Y.NYB): -0.16% to 96.82


• GBP/EUR (GBPEUR=X): +0.10% to €1.1899

Goldman Sachs analysts Dominic Wilson and Kamakshya Trivedi highlighted a “sharp re-rating lower of US assets” driven by tariff volatility and policy uncertainty. “The market is pricing in a higher risk of stagflation—sluggish growth paired with persistent inflation—as trade barriers escalate,” they noted.

Why It Matters:

• Consumer Sentiment Slump: The University of Michigan’s latest survey revealed US consumer sentiment at a 2.5-year low, with inflation expectations rising to 4.5%.


• Retail Sales Test: HSBC warned that Monday’s US retail sales data could further weaken the dollar if it confirms declining consumer spending.

Gold Prices Hold Near $3,000 Amid Stagflation Fears

Gold’s record-breaking rally paused slightly on Monday, with spot prices steady at $2,988.33 per ounce. However, the precious metal remains a top safe-haven asset as investors brace for prolonged economic turbulence.

Market Snapshot:

• Gold Futures (GC=F): -0.06% to $2,994.10


• 2025 YTD Gain: +14%

US Treasury Secretary Scott Bessent acknowledged recession risks but downplayed immediate concerns: “We’re likely to see an economic adjustment rather than a full downturn.” His comments did little to ease markets, with OANDA’s Kelvin Wong flagging gold’s critical resistance levels at 3,016–3,016–3,030.

Drivers of Demand:

1. Tariff-Driven Inflation: Rising import costs from US-China trade tensions threaten to accelerate inflation.


2. Geopolitical Risks: Escalating conflicts in the Middle East and Ukraine bolster gold’s appeal as a hedge.


3. Central Bank Buying: Emerging markets continue stockpiling gold to diversify away from the dollar.

Oil Prices Jump on Red Sea Supply Disruptions

Brent crude futures (BZ=F) surged 1.23% to $71.45 per barrel as the US intensified airstrikes against Yemen’s Houthi rebels, targeting their attacks on Red Sea shipping lanes.

Market Reaction:

• Brent Crude (BZ=F): $71.45 (+1.23%)


• WTI Crude (CL=F): $67.69 (+0.7%)

The conflict has disrupted 12% of global trade passing through the Red Sea, according to Reuters. A US official confirmed the military campaign could last weeks, raising fears of prolonged supply bottlenecks.

Broader Implications:

• Energy Inflation: Higher oil prices could exacerbate inflation, complicating central banks’ rate-cut plans.


• Strategic Reserves: Analysts speculate the US may tap its petroleum reserves to stabilize prices ahead of elections.

FTSE 100 and Global Markets Tread Cautiously

The UK’s FTSE 100 (^FTSE) edged up 0.1% to 8,647.16, underperforming US indices like the Dow Jones (+1.65%) and S&P 500 (+2.13%). European markets mirrored the cautious tone, with investors balancing tariff risks against optimism around AI and tech stocks.

Expert Outlook: What’s Next for Currencies and Commodities?

1. US Dollar (DXY): A break below 96.50 could signal further downside, especially if retail sales miss expectations.


2. Pound (GBP): Sterling’s rally faces resistance at $1.30; BoE rate cuts may limit gains.


3. Gold (GC=F): A close above 3,000couldtriggeralgorithmicbuying,pushingpricesto3,000couldtriggeralgorithmicbuying,pushingpricesto3,100.


4. Oil (BZ=F): Sustained Middle East tensions may keep Brent above $70, but demand concerns linger.

Conclusion: Navigating a Fragile Market Landscape

March 2025 has ushered in heightened volatility as tariffs, geopolitical strife, and stagflation fears dominate headlines. The pound’s resilience against the dollar underscores shifting capital flows, while gold and oil markets reflect a “risk-off” appetite among investors. With Trump’s trade policies and Middle East conflicts showing no signs of abating, traders should brace for further turbulence in forex and commodity markets.