The US dollar is in freefall, recording its worst first half-year performance in over 50 years, with a 10.8% drop against a basket of currencies. This historic plunge is a direct consequence of Donald Trump’s trade wars and deep-seated concerns about the escalating US national debt. The dollar index has fallen to its lowest level since March 2022, signalling a significant shift in investor confidence.
The pound has reached a three-year high against the struggling dollar. Despite the currency’s dramatic decline, US stock markets have shown remarkable resilience. Following a severe initial downturn in early April due to tariff announcements, a subsequent 90-day pause on tariffs and hopes for further trade progress fueled a robust rebound. This “Taco” trade, implying a reversal of aggressive policies, has pushed the S&P 500 to a record high by June’s end.