**Pound Gains Against Dollar Amid U.S. Trade Uncertainty; Inflation Data Weighs on Euro**

**LONDON (Reuters)** – The British pound gained ground against the U.S. dollar on Wednesday, buoyed by ongoing uncertainty surrounding U.S. trade policy that has placed downward pressure on the greenback. However, a recent release of UK inflation data showed softness, which negatively impacted the pound’s performance against the euro.

Recent figures from the Office for National Statistics revealed that UK inflation slowed to an annual rate of 2.6% in March, down from 2.8% in February. This figure fell short of analyst expectations, which had projected a 2.7% rate. It represents the slowest inflation rate seen in three months.

Particularly noteworthy was the decline in services inflation—an important metric closely monitored by the Bank of England (BoE)—which eased to 4.7% in March from February’s 5%, again underperforming forecasts of 4.8%.

As a result, the pound rose by 0.3% to $1.3267, approaching its six-month high against the U.S. dollar. In contrast, it struggled against the euro, which gained 0.5% to reach 85.66 pence against the pound.

Looking ahead, price pressures are expected to increase in the coming months, particularly as the effects of U.S. President Donald Trump’s tariff policies start to affect consumers more directly. Deutsche Bank economists suggest that although inflation may spike above 3.25% year-on-year in April—driven by rising energy and water bills—it will likely remain below the BoE’s peak forecast of 3.7% in the third quarter. This scenario could provide the Monetary Policy Committee (MPC) with leeway to implement rate cuts to support the slowing economy.

Deutsche Bank chief UK economist, Sanjay Raya, noted, “While inflation may see a significant uptick, we anticipate it will still run below the MPC’s projections well into 2025, allowing for potential interest rate reductions throughout the year.”

Market participants are currently pricing in expectations of three quarter-point cuts from the BoE this year, which would lower rates to 3.60% by December, their lowest level since January 2023.

Trump’s trade policies have generated confusion and concern among investors, raising fears about a potential recession that could impact global economic growth. This uncertainty has led to a marked decline in the U.S. dollar, which has dropped by over 4% against a basket of currencies since April 2, coinciding with the unveiling of proposed tariffs.

Forex traders should remain vigilant and factor in these dynamics as they navigate the markets, particularly how developments in U.S. trade policy and inflation trends in the UK could impact currency valuations moving forward. As the situation evolves, strategic positioning and awareness of these key economic indicators may provide opportunities for trading in both the pound and the dollar.