The pound hit a 51-month high against the US dollar as the 'sell America' trade triggered by Donald Trump's upheaval of the global order continued to depress the greenback.

Sterling rose to $1.3790 – its strongest level since October 2021 – while the euro hit its highest point against the US currency since June that year.

The dollar index, which measures the value of the greenback against six major currencies including the pound, the euro and the yen, has fallen 12 per cent to a four-year low since Trump returned to the White House in January 2025.

It is down almost 3 per cent since the start of last week as the US President's move to seize Greenland turbocharged the sell-off.

The dollar has been hit by a cocktail of concerns, from Trump's demands to take over Greenland and his use of tariffs to penalise or threaten key trading partners, to concerns about US government debt and the independence of the country's central bank, the Federal Reserve.

Speculation that the US and Japan may be planning a joint intervention in the currency markets to prop up the yen has also weighed on the dollar this week.

'The upending of the post-World War II order is a long-term negative for the dollar,' said Lefteris Farmakis, senior FX strategist at Barclays.

Pressure on the dollar – the world's reserve currency – has boosted demand for gold, which soared above $5,000 an ounce this week. 

And it comes as the Fed is widely expected to leave interest rates in the US unchanged in a range of 3.5 per cent to 3.75 per cent this evening despite frequent demands from Trump for aggressive cuts.

Trump has long criticised Fed chairman Jerome Powell over his reluctance to cut rates, describing him as a 'stubborn mule' and 'numbskull'.

The row escalated dramatically earlier this month when federal prosecutors launched a criminal investigation into Powell over the redevelopment of a Fed building. Trump has also tried to fire Fed governor Lisa Cook, with the case now being heard at the Supreme Court.

Against this backdrop, the President has promised to announce who will succeed Powell as chairman of the Fed when his term ends in May. 

That means the decision – which will be crucial for the US and global economies – is expected before the end of the week and could come as soon as today or tomorrow.

BlackRock executive Rick Rieder has emerged as the frontrunner, with White House economic adviser Kevin Hassett, former Fed governor Kevin Warsh and current Fed governor Christopher Waller also tipped for the post.

Nick Rees, head of macro research at foreign exchange company Monex, said Trump could announce the new central bank chief soon after the Fed's decision – particularly if he disagrees with it. 

He said: 'The big risk, as we see it, is not in the rate decision. We're pretty confident that the Fed is going to hold rates unchanged. But Trump is not going to like that.'

Karl Schamotta, chief market strategist with payments company Corpay, added: 'Economic policy uncertainty is soaring once again, leading to an intensification in the 'sell America' trade that has dominated markets for the better part of a year.

'Positive fundamentals should eventually reassert themselves, but for now no one is willing to catch the falling chainsaw that is the US dollar.'