The pound hits a four-year high against the dollar, prompting ‘buy now’ calls

Sterling rose to $1.38 against the US dollar, its strongest level since October 2021, as a combination of US economic turmoil, changing interest rate expectations and global uncertainty weakened the greenback.

Financial analysts said the move was driven more by a weaker dollar than a sudden strengthening of the pound, creating what some described as a rare buying opportunity for consumers and businesses that need US currency.

The rally follows heavy snow and ice across the United States caused by Winter Storm Fern, which left nearly 600,000 homes without power and caused thousands of flight cancellations. Economists estimate that the disruption could shave up to 1.5% off US first-quarter GDP growth.

Markets are also increasingly pricing in lower US interest rates later this year, pushing the dollar lower against a higher rate. At the same time, heightened political uncertainty linked to Donald Trump and continued volatility in commodities, including record highs in gold and silver, have pushed investors away from the dollar.

Tony Redondo, founder of Cosmos Currency Exchange, said the pound’s rise reflected a “perfect storm” of factors.

“The pound’s rise to $1.38 was driven by the weakness of the US dollar and UK rate expectations,” he said. “Investors are moving away from the dollar due to concerns about trade tariffs and the independence of the Federal Reserve.

“Meanwhile, continued UK inflation suggests the Bank of England may keep interest rates high for longer, attracting global capital. While some are eyeing $1.40, this rally may be nearing its peak as traders begin to take profits.”

Redondo added that for those who need dollars, the current rates are attractive. “At $1.38, you’re getting about 11 percent more value than this time last year. Timing a peak is almost impossible, but buying now is key in four years.”

Prem Raja, head of the trading floor at Currencies 4 You, agreed that the move was about the weakness of the dollar.

“Sterling’s rise to 1.38 is driven more by the weakness of the US dollar than the strength of the pound,” he said. “Markets are increasingly pricing in low US interest rates, which reduces the attractiveness of the dollar and encourages investors to shift exposure to the USD.

“That pressure has been reinforced by political uncertainty, renewed tariff negotiations, the risk of a government shutdown and comments from President Trump that show little concern for a weaker dollar.”

Raja said $1.40 is the next psychological level but warned that a short-term pullback is possible after such a move. “For those who need to buy dollars, these levels represent an excellent window,” he added.

Riz Malik, a director at R3 Wealth, suggested that the dollar’s weakness could be deliberate.

“The dollar should represent stability, but the US is not stable at the moment,” he said. “A weak dollar can support exports, so this may be by design.”

While analysts warn that currency markets can change quickly, the pound’s rise to its strongest level in more than four years underscores how economic and political changes around the world are changing currency movements – and why many believe the current window favors prime buyers.