Pound Rallies as US Court Halts Trump Tariffs and Dollar Weakens

The British Pound moved higher against the US Dollar on Friday after a ruling by the US Supreme Court blocked trade tariffs linked to former president Donald Trump. The decision dented confidence in the Dollar, already under pressure from signs of slowing US economic growth.

The court ruled that the tariffs, imposed under emergency powers, could not stand without congressional approval. The move immediately eased trade-war concerns and reduced demand for the Dollar, allowing the Pound to climb toward recent highs.

At the same time, fresh US economic data painted a troubling picture. Growth slowed sharply in the final quarter of 2025, while inflation pressures remained elevated. This combination of weaker growth and stubborn inflation has revived fears that the US economy may be heading into a difficult phase where policymakers face limited room to maneuver.

Financial markets initially reacted cautiously, with US equities dipping before recovering on news of the court ruling. The Dollar, however, remained on the defensive, reflecting investor unease over both economic momentum and policy uncertainty.
Across the Atlantic, the UK offered a more encouraging backdrop for Sterling. Retail activity rebounded strongly at the start of the year, and business surveys pointed to improving momentum in both services and manufacturing. These signals helped reinforce confidence in the Pound, even as the UK labor market showed signs of softening.

Looking ahead, diverging policy paths between the Federal Reserve and the Bank of England are likely to remain a key driver for the GBP/USD pair. While markets increasingly expect the UK to move toward lower interest rates sooner, expectations for US policy easing have been pushed further out.
This policy gap could introduce short-term volatility and potential pullbacks for the Pound. Still, as long as the Dollar remains weighed down by legal uncertainty and slowing growth, Sterling may continue to find support, keeping the broader upward trend intact.

For now, traders are watching whether the recent court decision marks a turning point for US trade policy—and whether the Dollar can regain its footing in an environment of softer growth and persistent inflation.