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The Dollar rises on the back of a court ruling that sets back President Donald Trump's tariff agenda.
However, analysts we follow warn that USD strength will be temporary as Trump will pursue other avenues to deliver on his pledges.
On Wednesday, the U.S. Court of International Trade issued a permanent injunction against the enforcement of Trump's tariffs, saying he exceeded his authority by using the International Emergency Economic Powers Act (IEEPA) to implement them.
The court found that the trade deficits and other issues cited by the administration for using the IEEPA did not constitute the "unusual and extraordinary threats".
"Markets responded swiftly – US equity futures and the US dollar surged, as investors anticipate a rapid rollback of levies that could ease pressure on U.S. and global growth. The ruling mandates clarity within 10 days, though insights may emerge sooner via Trump’s social media updates," says Antonio Ruggiero, FX & Macro Strategist at Convera.
"U.S. Treasury yields and equity futures increased. The market’s reaction suggests growing optimism around the trade outlook. However, we expect the USD's strength to be short‑lived," says Samara Hammoud, a foreign exchange strategist at Commonwealth Bank.
The court said the Administration has 10 days to halt the tariffs, offering relief to U.S. importers and further lowering the odds that the U.S. economy will fall into a recession owing to rising import costs.
The Pound to Dollar exchange rate (GBP/USD) looks set to record a third consecutive daily decline following the news, retreating to 1.3414, having been as high as 1.3592 on Monday.
Trump's imposition of import tariffs has battered the U.S. Dollar in 2025 as investors worry it will significantly harm the domestic economy.
However, extended positioning and technical conditions favour an extension of the relief-style recovery, as there is ample scope for traders to book profits on trades that benefited from the USD selloff.
For GBP/USD, losses can extend back to at least 1.34 and then 1.3250, where graphical support from April-May consolidative action would encounter the rising 50-day exponential moving average:
Above: GBP/USD at daily intervals.
Fundamentals nevertheless remain pitted against the Dollar, which can mean the Pound-Dollar will most likely extend its rally at some point in the coming days and weeks.
The Administration has already filed an appeal, and legal analysts suggest that, if the appeal fails, the administration may explore alternative legal avenues to implement tariffs, such as invoking Section 301 of the Trade Act of 1974 or Section 122 of the Trade Expansion Act of 1962.
"We expect the USD's strength to be short‑lived. We do not anticipate a full reversal of U.S. trade policy because President Trump will likely pursue alternative legal avenues to implement tariffs. As such, we continue to expect a gradual reallocation out of USD assets," says Hammoud.