The Pound held firm on Monday, on track for its strongest monthly gain against the Dollar since late 2023, highlighting the extent to which investors have turned away from US assets this April.

Sterling rose 0.3% to $1.3345, positioning it for a 3.1% increase for the month, its best performance since November 2023. However, the Pound has struggled against the Euro, which has climbed nearly 2% in April, its biggest monthly advance against Sterling since December 2022, when it rose 2.4%, Reuters reports.

The Euro has been one of the main beneficiaries of the investor shift away from the Dollar, strengthening against most major currencies.

Earlier this year, part of the Pound’s strength was driven by expectations that the Bank of England would be slower than other central banks to begin cutting interest rates.

Derivatives markets indicate that traders are anticipating about 85 basis points of rate cuts from both the Bank of England and the US Federal Reserve this year.

Recently, Sterling’s strength has been fuelled more by investors moving away from the Dollar, amid concerns over the impact of President Donald Trump's tariffs on the US economy.

The UK is seen as relatively less vulnerable to Trump's tariffs once the current 90-day suspension ends in early July. In 2024, the US recorded a $12 billion goods surplus with the UK, in contrast to a nearly $300 billion deficit with China and a $236 billion deficit with the European Union, according to figures from the US Trade Representative (USTR).

With this backdrop, Barclays analysts maintain their positive outlook on Sterling, especially relative to the Euro.

“The UK's greater resilience to direct tariffs than the eurozone implies smaller demand damage, thereby offsetting the drag from a more-limited fiscal space,” they said.