The US dollar has stumbled significantly in the first half of 2025, dropping 10.8% against a basket of currencies. This downturn, its worst performance in over 50 years, is primarily driven by widespread concerns over Donald Trump’s economic policies, including his tariffs and the anticipated impact on the US national debt. The currency’s safe-haven role is increasingly being questioned by investors.
The pound has surged to a three-year high of $1.37 against the weakened dollar. While the dollar faced a substantial sell-off, US stock markets, after an initial “Liberation Day” tariff-induced tumble, experienced a historic rebound. This propelled the S&P 500 to a record high by June’s end, suggesting that while trade tensions create volatility, market participants are quick to capitalize on any signs of de-escalation or strong underlying corporate performance, particularly in AI-related sectors.
