Sterling climbed 0.4% to US$1.3341 as of 2.30am, even with the Bank of England widely expected to announce a quarter-point rate cut later in the day.
The risk-sensitive Aussie leapt as much as 0.6% against the greenback, and the New Zealand dollar advanced as much as 0.5%.
Posting on his Truth Social platform, Trump said he would hold a new conference about a “major trade deal with representatives of a big, and highly respected, country,” adding that it would be the “first of many”.
He did not name the country or provide other details.
Prior to the New York Times report, analysts had flagged the chances of a US trade agreement after Britain clinched a free trade pact with India earlier in the week.
Last week, Trump said he has “potential” trade deals with India, South Korea and Japan.
“The market is running with the idea that any trade deal is good news, because it provides a certain degree of clarity and could provide a template for others to follow,” said Rodrigo Catril, senior FX strategist at National Australia Bank.
“At the same time, a British trade deal is considered among the easier negotiations, while talks with Europe and particularly China are expected to be more complicated,” he said.
Additionally, “the devil will be in the details. “These deals are not going to come for free,” Catril said.
Investors will watch closely for any signs of thaw when US treasury secretary Scott Bessent and chief trade negotiator Jamieson Greer meet China’s economic tsar, He Lifeng, on Saturday in Switzerland.
Trump suggested yesterday that Beijing initiated the talks, and said he was not willing to cut tariffs on Chinese goods to nurture negotiations.
The Chinese yuan was little changed at 7.2325 per dollar in offshore markets, following a 0.26% decline yesterday.
The US dollar weakened against most of its major peers today, giving back some of yesterday’s gains after the Federal Reserve (Fed) warned of rising risks to the economy from higher inflation and unemployment.
Yesterday, the Federal Open Market Committee (FOMC) left interest rates unchanged, as widely expected, but Fed chair Jerome Powell said it is not clear if the economy will continue its steady pace of growth or wilt under mounting trade uncertainty and a possible spike in inflation.
“It’s not at all clear what the appropriate response for monetary policy is at this time.
“It’s really not at all clear what it is we should do,” Powell said.
Markets currently price three quarter-point rate cuts by year-end, with the next coming in July or September.
“The FOMC does not want to pre-empt changes in the US economy – it wants to wait for ‘hard’ economic data to guide its policy actions,” said Joseph Capurso, head of international and sustainable economics at Commonwealth Bank of Australia.
“From here, we expect communication from chair Powell and other FOMC members to focus on making sure inflation expectations are anchored,” he said.
“There is a risk public statements lean hawkish,” he added.
The US dollar index, which measures the greenback against six major peers, eased 0.2% to 99.682, erasing about two-thirds of the previous day’s advance.
The euro added 0.2% to US$1.1327, reversing course after a 0.56% decline yesterday that was its biggest in two weeks.
The dollar weakened 0.1% to ¥143.63 and fell 0.2% to CHF0.8229.