The US dollar has had a wobbly half, with a 10.8% decline against a basket of currencies in the first half of 2025, marking its worst performance in over 50 years. Donald Trump’s policies have sparked significant investor uncertainty, particularly concerning his tariffs and the “big beautiful” budget bill’s impact on national debt, leading to a diminished safe-haven appeal.
The pound has soared to a three-year high of $1.37 against the weakened dollar. David Morrison of Trade Nation points to Trump’s tariffs and the chaotic nature of his administration as key factors. Despite the dollar’s struggles, US stock markets have shown remarkable resilience, rebounding to a record high by the end of June. This “Taco” trade, implying a reversal of aggressive policies, and the “fear of missing out” on market gains have driven investor behavior.