KRW & GBP - Markets & outlook
South Korean won - KRW:
The US imposed a 25% reciprocal tariff rate on goods from South Korean as part of Trump’s growing trade war with countries around the world.
The outlook for emerging Asian currencies is worsening again after US President Donald Trump announced a raft of new tariffs globally, curbing optimism that his threats were mainly bargaining ploys.
Martial Law Crisis
South Korean President Yoon Suk Yeol’s brief imposition of martial law in early December triggered a political crisis, with the opposition demanding his impeachment and treason charges.
The move sparked widespread protests, drawing parallels to the nation’s authoritarian past, and blindsided his party, the public, and international allies like the US. The fallout has not only destabilized domestic politics but also raised concerns about South Korea’s sovereign-debt rating and heightened volatility for the won amid fears of prolonged political deadlock.
However, South Korea’s won quickly pared its losses against the U.S. dollar following the swift passage of a parliamentary resolution calling for the lifting of martial law.
British pound - GBP:
The US imposed a 10% reciprocal tariff rate on goods from the UK as part of Trump’s growing trade war with countries around the world.
The British pound (GBP), often referred to as sterling, is one of the world’s oldest and most traded currencies. As the official currency of the United Kingdom, its value is influenced by a combination of economic performance, monetary policy, political stability, and global market sentiment. Unlike commodity-linked currencies such as the Canadian and Australian dollars, the pound is primarily driven by domestic economic indicators and investor confidence in the UK economy.
Monetary policy set by the Bank of England (BoE) plays a key role in determining the value of the GBP. Interest rate decisions influence investment flows, with higher interest rates attracting foreign capital and strengthening the pound, while lower rates can weaken demand and push the currency down. Inflation levels, employment data, and GDP growth are closely watched by traders, as they help predict the BoE’s future policy direction.
The GBP is also highly sensitive to political events and government policies, particularly in the aftermath of Brexit. The UK’s departure from the European Union introduced currency volatility, as uncertainties surrounding trade agreements, business regulations, and foreign investment continue to affect investor sentiment. Periods of political instability, such as leadership changes or unexpected election outcomes, often lead to short-term fluctuations in the pound’s value.
Sterling’s performance is also shaped by its relationship with major trading partners, particularly the United States and the European Union. Since the UK relies heavily on trade with Europe, economic developments in the Eurozone can have a direct impact on GBP demand. Additionally, the GBP/USD pair—often called “Cable” in forex markets—is one of the most liquid and widely traded currency pairs, making it susceptible to movements in the US dollar.
Market trends show that the GBP is more volatile during European and U.S. trading hours, as it is heavily traded in London, one of the world’s largest financial hubs. Global risk appetite also plays a role; during economic uncertainty, investors tend to shift towards safe-haven currencies like the US dollar or Japanese yen, often leading to GBP depreciation.
Looking ahead, the future of the pound will depend on the UK’s economic recovery, the BoE’s policy decisions, trade agreements, and investor confidence. With the UK seeking to solidify its post-Brexit position in global trade, factors such as foreign investment, economic reforms, and business growth will shape the pound’s trajectory in the years to come.
