Summary:
Sterling rallied on trade deal hopes but fell to a three-week low of 1.3220 Friday after the agreement proved limited.
Sterling, which had rallied on news reports of an impending trade deal, gave back gains when the agreement turned out to be pretty limited and struck a three-week low of 1.3220 in early trade on Friday.
The US has agreed to reduce import taxes on a set number of British cars and allow some steel and aluminium into the country tariff-free, while leaving a 10% duty on most goods from the UK in place.
In exchange, the UK has reduced tariffs on US products including beef and ethanol, which US commerce secretary Howard Lutnick said would create five billion dollars in "opportunity for American exports".
The US president had previously described the deal as "full and comprehensive", but analysts said it did not appear to meaningfully alter the terms of trade between the countries.
The BOE cut interest rates by a quarter point to 4.25% to cushion the UK economy against the impact of rising economic uncertainty. Financial markets expect at least two further quarter-point cuts this year.
Rate setters said Reeves's £25bn increase in employer national insurance contributions, which came into force last month, would affect employment, wages and prices, though it remained unclear to what extent.
Sterling is heading lower towards the low around 1.3200 in mid-April. The basic case scenario is that it will find robust support there, and resume its uptrend.
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