The US dollar is in a historic retreat, with a 10.8% decline against a basket of currencies in the first half of 2025. This significant drop, its worst performance in over 50 years, is driven by the combined forces of Donald Trump’s trade wars and mounting fiscal strain from his “big beautiful” budget bill. Investors are rapidly selling off dollar-denominated assets.
The pound has surged to a three-year high of $1.37 against the weakened dollar. Carsten Brzeski of ING Research described the first six months as “action-packed,” with tariffs, market volatility, and questions about Fed independence. Despite the dollar’s significant struggles, US stock markets, after an early April global sell-off, rebounded strongly, with the S&P 500 reaching a record high by June’s end, demonstrating market resilience and adaptability to policy shifts.
