Pound near three-year high as dollar loses safe-haven appeal
The pound is approaching a three-year high against the US dollar, as trade tensions grip the markets.
The dollar has continued to lose ground against other currencies, after China hit back against the US today, and accused Washington of “seriously violating” their trade pact.
Sterling gained almost a cent today, trading as high as $1.3557, its highest level since 27 May – when the pound hit a three-year peak.
Concerns that the US trade war might be flaring up again are hurting the dollar; the euro has hit its highest level since April, at $1.143.
Against a basket of currencies, the dollar is down over 0,5% today, hitting a five-week low this morning.
Dean Turner, chief eurozone & UK economist at UBS Global Wealth Management, says a combination of policy uncertainty and ongoing trade and budget deficits points to more weakness in the coming quarters:
He told clients:
“Nobody can know for sure if the ‘dollar unwind’ is over or whether it has only just begun.
When thinking about the outlook for the USD, we should acknowledge that one important thing has changed. In recent years, periods of uncertainty have benefited the USD as investors flocked to what was perceived to be a safe-haven currency. In today’s world, with the US increasingly the source of uncertainty, its safe-haven appeal is dwindling.
Key events
Here’s a chart showing how the pound has risen close to a three-year high against the US dollar today (but it still a little lower than last week)
The dollar has begun June with a “significant decline” due to the renewed escalation in trade tensions, reports Hani Abu Akleh, senior market analyst at XTB MENA.
The dollar’s decline came after US President Donald Trump announced a 50% tariff on steel and aluminum imports, effective June 4, a move that further heightened global trade tensions.
Meanwhile, trade disputes with China escalated after Beijing rejected Washington’s accusations that it had violated the Geneva agreement signed last May. While US officials criticized what they described as China’s failure to commit to removing non-tariff barriers, Beijing demanded that the United States roll back trade restrictions it described as discriminatory.
Pound near three-year high as dollar loses safe-haven appeal
The pound is approaching a three-year high against the US dollar, as trade tensions grip the markets.
The dollar has continued to lose ground against other currencies, after China hit back against the US today, and accused Washington of “seriously violating” their trade pact.
Sterling gained almost a cent today, trading as high as $1.3557, its highest level since 27 May – when the pound hit a three-year peak.
Concerns that the US trade war might be flaring up again are hurting the dollar; the euro has hit its highest level since April, at $1.143.
Against a basket of currencies, the dollar is down over 0,5% today, hitting a five-week low this morning.
Dean Turner, chief eurozone & UK economist at UBS Global Wealth Management, says a combination of policy uncertainty and ongoing trade and budget deficits points to more weakness in the coming quarters:
He told clients:
“Nobody can know for sure if the ‘dollar unwind’ is over or whether it has only just begun.
When thinking about the outlook for the USD, we should acknowledge that one important thing has changed. In recent years, periods of uncertainty have benefited the USD as investors flocked to what was perceived to be a safe-haven currency. In today’s world, with the US increasingly the source of uncertainty, its safe-haven appeal is dwindling.
EU delegates fly to Washington for urgent steel tariff talks
Lisa O’Carroll
A high level delegation from the EU is on the way to Washington DC today for urgent talks to avert a doubling of Donald Trump’s tariffs on steel exports on Wednesday.
With the new 50% tariff entering into force in two days time, the talks take on a new sense of urgency, my colleague Lisa O’Carroll reports.
They will take place in parallel with talks between European Commission vice president Maros Sefcovic in Paris and US commerce secretary Howard Lutnick on the margins of the OECD council meeting in Paris tomorrow.
Trump’s surprise announcement over the weekend was described as “yet another body blow” by UK Steel which had been promised the existing 25% tariff would be reduced to 0% as part of Keir Starmer’s highly publicised deal with Trump last month.
It is now a race against time for the UK and the EU, which has also been exposed to tariffs on cars and a future blanket tariffs on all exports from the bloc.
A team of around half a dozen, headed by Tomas Baert, trade adviser to European Commission president Ursula von der Leyen will be in the US, aiming for a breakthrough on steel before Wednesday but also a long tariff and potential mini trade deal.
Sefcovic has a number of bilaterals in Paris including the US and China where Trump’s decision to double import duties to 50% on steel will be very much on the agenda.
He is also meeting representatives from Australia and Thailand tomorrow and a delegation from India today.
Tesla sales plunge 67% in France
In the auto sector, Tesla’s sales slump has not abated, in France at least.
Tesla’s new-vehicle registrations fell by 67% in France in May, according to French industry association Plateforme Automobile, to 721 cars.
Tesla’s registrations were the lowest since July 2022, despite the company rolling out a redesigned version of its most popular vehicle, the Model Y, Bloomberg reports.
Data last week showed that Tesla’s sales in Europe fell 49% in April, year-on-year, despite hopes that the refreshed Model Y would spur a sales boost.
Back in the City, shares in defence companies are pushing higher on expectations of a spending boost from the UK government.
Babcock are now up around 8.5%, leading the FTSE 100 risers, whle BAE Systems are up 2% to a record high.
Loredana Muharremi, equity analyst at Morningstar, says the UK’s strategic defence review is “unequivocally positive for the sector”.
Key beneficiaries of this announcement include BAE Systems, which is well-positioned across all priority areas (such as submarines, munitions, cyber via its Digital Intelligence division, and long-range weapons), and Rolls-Royce, through its role in naval nuclear propulsion.
Also, a broader network of Tier 2 and Tier 3 suppliers in the UK industrial base should benefit from the localisation of munitions and components.
Greg Hands joins EP Group as Royal Mail directors stand down
It’s all change at Royal Mail’s parent company, International Distribution Services, today, following its takeover by Czech billionaire Daniel Křetínský.
Firstly, its boardroom has become much emptier. Keith Williams, Sarah Hogg, Maria de Cunha, Michael Findlay, Lynne Peacock, Shashi Verma, Jourik Hooghe and Ingrid Ebner have all stepped down as non-executive directors of IDS today.
But while they leave, former UK government minister Greg Hands is joining Křetínský’s EP Group, as a full time Strategic Adviser.
According to a post on LinkedIn, Hands will have a current special focus on the UK and Germany. It says:
In his new role, reporting directly to Chairman and CEO Daniel Křetínský, Mr Hands will be based primarily in the UK, with additional activities in Germany. He will provide strategic counsel to EP Group’s executive leadership, focusing on regulatory and market developments in the UK and Germany.
His insights will support EP Group’s efforts to expand its portfolio across both countries, aligning with the company’s commitment to secure and sustainable energy solutions.
The shake-up comes as IDS’s stock market listing in London is officially cancelled today, after the takeover by EG Group was completed earlier this year.
Meta “aims to fully automate ad creation using AI”; advertising firms’ shares fall
Shares in advertising companies have just taken a hit, following a report that social-media company Meta is aiming to let brands fully create and target ads using artificial intelligence by the end of next year.
According to the Wall Street Journal, Meta is aiming to help brands create advertising concepts from scratch.
Meta’s ad platform already offers some AI tools that can generate variations of existing ads and make minor changes to them before targeting the ads to users on Facebook and Instagram, and now plans to expand this.
AI-powered advertising is part of Meta Chief Mark Zuckerberg’s grand vision for his company’s evolution. Advertising makes up the bulk of Meta’s business—it brought in more than 97% of overall revenue in 2024—and funds its multibillion-dollar investments in AI chips and data centers, and for training cutting-edge AI models.
Using the ad tools Meta is developing, a brand could present an image of the product it wants to promote along with a budgetary goal, and AI would create the entire ad, including imagery, video and text. The system would then decide which Instagram and Facebook users to target and offer suggestions on budget, people familiar with the matter said.
Meta also plans to enable advertisers to personalize ads using AI, so that users see different versions of the same ad in real time, based on factors such as geolocation, the people said. A person seeing an advertisement for a car in a snowy place, for example, might see the car driving up a mountain, whereas a person seeing an ad for that same car in an urban area would see it driving on a city street.
Investors are calculating that a surge in AI adverts would dent revenues and profits at advertising companies – shares in WPP are down 4.1%, while Publicis Group have fallen 3%.
Although the US dollar has fallen against most currencies, it has risen against the Russian rouble today.
The rouble has dropped by 1.7% this morning to ₽78.8 to the $, reversing a recovery last week that pushed Russia’s currency to a two-year high.
The losses come as Ukrainian and Russian negotiators prepare to meet later today in Istanbul to hold peace talks.
The meeting follows a major Ukrainian drone attack on Russian military bombers in Siberia yesterday, and attacks by Russia on Ukraine earlier today, which could dampen hopes of a breakthrough in Turkey.
The rouble could also be under pressure from speculation that Russia’s central bank might cut interest rates soon, to stimulate economic growth.
Monzo’s highest paid director pockets £12m
Lauren Almeida
The highest paid director at Monzo made £12m last year, the bank’s latest accounts show.
Monzo, the digital bank best known for its coral pink debit cards, has become one of the most popular and fastest growing banks in the UK. Its success has also meant its top paid director has seen their total compensation package rise to £12m in its financial year ended in March, compared with £1.7m last year. Just over £11m of the package this year came from share-based payments.
It makes the director, who was not named in the report but is thought to be its chief executive TS Anil, among the best paid in the banking sector. Last year the boss of Lloyds Bank, Charlie Nunn, took home a total package of £5.6m, while the chief executive of Barclays, C.S. Venkatakrishnan, was paid a package worth £8.7m, excluding the impact of share price appreciation.
At digital rival Starling Bank, its latest annual report showed its top paid director’s package was worth £1.7m.
Monzo, which has been led by Anil since 2020, also reported a bumper set of numbers for its 2025 financial year. Its revenue grew by 48% to surpass £1bn for the first time, and pre-tax profit more than quadrupled to £60.5m. The bank now has 12.2m customers, up 25% compared with last year.
UK mortgage approvals fall after stamp duty changes
UK mortgage approvals have fallen to their lowest level in a year, as the end of a tax break on stamp duty cooled demand.
Net mortgage approvals for house purchases, decreased for the fourth consecutive month in April, falling by 3,100 to 60,500, according to data from the Bank of England.
That’s the lowest number of monthly mortgage approvals since February 2024.
The drop follows a rush to agree house sales earlier this year, before changes to stamp duty at the start of April which pushed up the cost of buying a new home in England and Northern Ireland.
The BoE’s data also shows that net borrowing of mortgage debt decreased sharply by £13.7bn to -£800m in April. This followed an increase in net borrowing by £9.7bn to £13.0bn in March.
Simon Gammon, managing partner at Knight Frank Finance, says:
“There was a significant drop in net borrowing in April because so many deals were squeezed through in March to beat the stamp duty deadline. Approvals for house purchase are a much better barometer of the health of the market as they reflect buyer intent at an earlier phase.
“On that front, the market looks solid but unspectacular. Approvals are tracking about 10% below the 2019 average and are unlikely to improve markedly without further, sustained falls in mortgage rates. That looks unlikely at the moment – hotter-than-expected inflation figures published earlier this month prompted a repricing among the high street’s larger lenders. Leading fixed rates are now only a whisker below 4%.
“Whether that proves to be a sustained move higher will depend on a combination of domestic UK inflation data and the day-to-day whipsawing of US trade policy.”
