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(Bloomberg) -- UK stocks and the pound were little changed after US President Donald Trump announced a trade framework with the UK, which he called a “breakthrough” deal.
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Sterling held gains triggered by the Bank of England policy decision, advancing against all Group-of-10 currencies except for the dollar. The FTSE 100 closed 0.3% lower, underperforming gains on the Euro Stoxx 50.
Trump said full details of the pact would still be negotiated over the coming weeks. But under the agreement, the UK would fast-track American goods through their customs process and reduce barriers on agricultural, chemical, energy and industrial exports.
“News of trade agreements between UK and US are welcome in the global context of trade uncertainty,” said Joaquin Thul, economist at EFG Asset Management. “However, the impact of this on activity is expected to be limited in the short term.”
The announcement is the first Trump made since imposing high tariffs on dozens of US trading partners. The president later paused those duties temporarily in order to allow nations to reach agreements with the US.
Trump had teased the announcement of a “major trade deal” in a social media post on Wednesday night, with subsequent reports indicating the country involved was the UK. The pound initially got a boost on the view that reduced tariff risks would support Britain’s economic growth, but the gains soon fizzled out as investors awaited for more detail.
Traders then turned their attention to the BOE rate decision, which was seen as more hawkish than markets expected. That led investors to pare bets on an interest-rate cut in June, lifting gilt yields and the pound.
The rate on two-year UK bonds was up 11 basis points to 3.92% toward the end of the session, while the pound was up 0.4% versus the euro to 84.72 pence and flat against the dollar at $1.3293.
Elevated interest rates, stress on long-term bond yields and sluggish economic growth have all been weighing on the local stock market. UK stocks have hardly set the world alight this year, with the big-cap FTSE 100 index’s near 5% gain still slightly trailing its euro-area peer the Euro Stoxx 50. Meanwhile, the more domestic FTSE 250 has only recently shown signs of shaking off its negative returns in 2025.