Above: Could the GBP/USD peak be in?
The Dollar will soon start to appreciate again.
This is the view of Dr. Torsten Sløk, Chief Economist at Apollo, one of the world's largest asset managers.
Writing to clients on Tuesday, Sløk indicates that a recent spell of underperformance by the Dollar is potentially coming to an end as the drivers of weakness in the first six months of this year fade.
Such a view casts doubt on the Pound to Dollar exchange rate's (GBP/USD) ability to print new highs beyond the 1.3788 high-water mark printed on July 01.
If correct, the view would be an important warning for those who are basing their international payment strategies on the assumption that the GBP/USD rally is here to stay.
"Looking ahead, with Section 899 behind us and the trade war likely to be resolved within the next couple of weeks, the U.S. dollar is expected to appreciate again," says Sløk.
As Chief Economist at Apollo Global Management, Sløk advises one of the world's largest asset managers (over $650 billion in assets). His outlook directly influences how capital is allocated across private equity, credit markets, real estate and insurance portfolios.
His experience bridges both policy and markets, having worked at both the IMF and OECD, and spent 15 years at Deutsche Bank as Chief International Economist. His views on interest rates, inflation, and recession risks can sway billions in investment flows.
His latest view on the Dollar is that it has depreciated more in the first half of 2025 than yield differentials would have predicted:
Image courtesy of Torsten Sløk at Apollo.
"Regression models indicate that this was due to the trade war and economic policy uncertainty, including concerns among foreign investors about Section 899 and the Mar-a-Lago Accord," he says.
August 01 is the deadline for current deadline for countries to strike new trade deals, although there are indications that the deadline can slip if partners are negotiating in good faith. Either way, closure to one of the issues behind the Dollar's sharp falls against the Pound and other currencies is close.
"The trade war likely to be resolved within the next couple of weeks, the U.S. dollar is expected to appreciate again," says Sløk.
Also, "renewed strong appetite for U.S. assets after Liberation Day is also visible in the Treasury International Capital data for May."
Image courtesy of Torsten Sløk at Apollo.