Sterling surged on Thursday, pulling the Australian Dollar higher, following US President Donald Trump's statement that he would unveil “a major trade deal” later in the day, reportedly involving Britain, according to the New York Times.

The Pound rose as much as 0.5% before trimming gains, trading 0.2% higher at $1.3315 at the time of writing, despite expectations that the Bank of England would announce a 0.25% interest rate cut later in the day.

The risk-sensitive Australian Dollar jumped as much as 0.6% against the US Dollar, while the New Zealand Dollar climbed up to 0.5%, though both later trimmed their gains to around 0.3%.

In a post on his Truth Social platform, President Donald Trump announced he would hold a press conference at 1400 GMT to discuss a “major trade deal with representatives of a big, and highly respected, country,” describing it as the “first of many.” He did not specify the country or share additional details.

Before the New York Times report surfaced, analysts had already highlighted the possibility of a US trade deal, especially after Britain secured a free trade agreement with India earlier in the week, Reuters reports.

Just a week prior, Trump mentioned he had “potential” trade deals in the works 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,” stated Rodrigo Catril, senior FX strategist at National Australia Bank.

At the same time, he noted that a trade agreement with Britain is seen as relatively straightforward, whereas negotiations with Europe, and especially China, are expected to be more complex.

“The devil will be in the details. These deals are not going to come for free,” Catril added.

Investors are expected to closely monitor Saturday’s meeting in Switzerland between US Treasury Secretary Scott Bessent, chief trade negotiator Jamieson Greer, and China’s top economic official, He Lifeng, for any indications of easing tensions.

On Wednesday, Trump claimed that Beijing had initiated the talks but made it clear he was unwilling to reduce tariffs on Chinese imports to encourage progress in the negotiations.

The Dollar gained 0.1%, reaching 7.2368 Chinese Yuan in offshore trading. It also rose slightly to 143.96 Yen and 0.8246 Swiss Franc.

Furthermore, the Euro remained unchanged at $1.1303, following a 0.56% drop on Wednesday, which marked its largest decline in two weeks.

The Dollar began Thursday on a strong note, following a warning from the Federal Reserve about growing risks to the economy due to higher inflation and rising unemployment.

As anticipated, the Federal Open Market Committee (FOMC) kept interest rates unchanged, but Fed Chair Jerome Powell cautioned that it remains uncertain whether the economy will maintain its steady growth or struggle under increasing trade uncertainty and a potential surge in inflation.

“It's not at all clear what the appropriate response for monetary policy is at this time,” Powell stated.

Markets are currently pricing in three quarter-point rate cuts by the end of the year, with the first expected to occur in July or September.