FTSE 100 Set to Surge on Trade Deal Buzz as GBP/USD Resumes Uptrend?
Despite troubling economic signals from Britain, optimism around an imminent trade agreements is fueling new strength in the FTSE 100 and...
Quick overview
- Optimism around a potential trade agreement between the UK and the US is strengthening the British pound despite ongoing economic challenges in Britain.
- The GBP/USD currency pair has shown bullish momentum, climbing back toward the 1.34 level amid reports of nearing trade deal finalization.
- Key UK industries, particularly automotive brands, may benefit from revised tariffs and quotas, providing relief amid a sluggish domestic economy.
- Traders are closely monitoring developments, betting that a formal agreement could further boost the pound in the near future.
Live GBP/USD Chart
Despite troubling economic signals from Britain, optimism around an imminent trade agreements is fueling new strength in the FTSE 100 and the British pound.
FTSE 100 Edges Higher as Trade Momentum Builds
London’s FTSE 100 index inched up by 0.01%, or 1.07 points, to close at 8,597.42 in yesterday’s session. While the gain was marginal, early signs suggest a potentially stronger open today, with the benchmark possibly gapping higher at the start of the European session. Momentum is building following the official confirmation of a UK-India trade agreement and renewed optimism over a forthcoming US-UK deal.
Equity sentiment in London was buoyed by diplomatic and economic developments, as the UK’s finalized agreement with India gave markets a tangible reason to rally. Further supporting investor confidence were upbeat comments from both US and UK officials indicating that a trade arrangement is nearing completion, which could significantly ease transatlantic trade barriers.
FTSE 100 Chart Daily – Heading Back to Record Highs 
In contrast, other leading European markets showed signs of strain. Concerns mounted over the possibility of renewed tariff actions by former US President Donald Trump, should he return to power—particularly fears around protectionist moves that could hit global trade. This divergence left UK equities as relative outperformers amid otherwise cautious regional sentiment.
GBP/USD Resumes Uptrend
The GBP/USD currency pair is showing renewed bullish momentum, climbing back toward the 1.34 level amid reports that the United Kingdom and the United States are on the verge of finalizing a long-anticipated trade agreement.
While signs of economic fragility persist in the UK—highlighted again by today’s confirmation of continued weakness in the services sector—traders are choosing to focus on diplomatic progress that could have significant implications for trade, tariffs, and investor confidence.
GBP/USD Chart Daily – Sterling Climbs Despite Domestic Headwinds
Over the past week, GBP/USD broke above 1.3443, marking its highest level since early 2022 and topping its 2024 highs. However, as the US dollar regained some ground late in the week, the pair eased slightly, closing just under 1.33.
Still, momentum returned swiftly at the start of this week, with the pound surging more than a cent intraday to touch 1.3401. This strength comes in the face of discouraging domestic data: the UK’s final April services PMI reaffirmed the sector remains in contraction territory, underscoring a sluggish post-pandemic recovery.
Trade Deal Expectations Drive Risk Appetite
What’s fueling sterling’s resilience is a potential breakthrough on the trade front. Market sentiment improved sharply after reports surfaced, including from the Financial Times, that US and UK negotiators are nearing a deal that would roll back long-standing steel and auto tariffs originally imposed during the Trump administration. The proposed agreement includes lower tariff quotas for British steel and vehicles entering the US, and possible reductions in duties on American agricultural imports heading to the UK.
For its part, Britain is reportedly prepared to adjust certain elements of its digital services tax and to ease duties on US exports. However, the UK maintains firm resistance to US food production standards—most notably rejecting chlorine-washed poultry—highlighting the delicate balance between regulatory sovereignty and economic pragmatism.
Industry Relief Could Be in Sight
Key UK industries, especially high-end automotive brands like Jaguar Land Rover and Bentley can see some relief in the form of revised quotas or duty rollbacks could offer these exporters a badly needed boost, helping to offset the broader domestic slowdown. Market participants are watching closely to see if the UK can clinch the deal before India, a move that would underscore Britain’s renewed focus on bilateral trade partnerships in the post-Brexit era.
With the GBP/USD pair once again approaching the 1.34 threshold, traders appear to be betting that a formal agreement—possibly to be unveiled in the coming days—could spark the next leg higher for sterling.
GBP/USD Live Chart
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