What changed in Invesco CurrencyShares British Pound Sterling Trust's 10-K — 2024 vs 2025

One January 31, 2020, the United Kingdom withdrew from the European Union and was in a transition period through December 31, 2020. Ongoing changes in the United Kingdom’s trade, regulatory and economic relationships following the United Kingdom’s withdraw from the European Union may adversely affect the value of the Shares.

Although the formal withdrawal has occurred, the United Kingdom’s post-exit framework, including trade agreements, financial services, immigration and regulatory policy, continue to evolve and may result in periods of increased volatility in the market prices of the British Pound Sterling and the Shares. Increased volatility could, in itself, decrease the value of the Shares.

That was not the case in 2025, when interest income exceeded expense by a significant margin; but, when expense exceed interest income, the trustee needs to withdraw British Pounds Sterling from the Trust to pay the excess expenses.

This volatility could materially and adversely affect the performance of the Shares. The United States, under the Trump administration, has implemented significant tariff increases on imports from a large number of countries, affecting a broad array of goods, and has signaled that additional tariffs may be imposed.

These actions are part of a broader shift in U.S. trade policy that has at times been difficult to predict. The potential for further escalation, including the imposition of new or higher tariffs with limited notice, has contributed to increased uncertainty in global markets. In response, other countries, including China, have announced retaliatory measures.

While some tariff reductions have been implemented pursuant to temporary arrangements between the United States and various trading partners, such measures remain subject to reversal. These developments have contributed to increased volatility in foreign exchange markets, including fluctuations in the USD/British Pound Sterling exchange rate. Sustained or increased volatility could materially and adversely affect the performance of the Shares.

Shareholders do not have the protections associated with ownership of shares in an investment company registered under the Investment Company Act of 1940.

In general, cyber incidents can result from deliberate attacks or unintentional events. Cyber attacks include, but are not limited to gaining unauthorized access to digital systems for purposes of misappropriating assets or sensitive information, corrupting data, or causing operational disruption.

Compromises in the software supply chain or incidents at critical third-party vendors could 7 magnify the operational impact of a cyber event and impair the Trust’s ability to process Shareholder or Basket transactions. In addition, substantial costs may be incurred in order to prevent any cyber incidents in the future.

The committee reports to Invesco’s Enterprise Risk Management Committee which provides updates to the Invesco Board of Directors to facilitate their oversight. 8 Although risks from cyber threats have not materially affected the Trust’s business strategy, results of operations or financial condition as of December 31, 2025, Invesco continues to c losely monitor cyber risk.

The Sponsor oversees cybersecurity risks for the Trust by applying Invesco's enterprise policies and control framework to the Trust's operations and service providers and by escalating any Trust relevant findings through the Sponsor's management reporting and certification processes.

(c) Although the Trust does not redeem Shares directly from its shareholders, the Trust, from time to time, redeems Baskets from Authorized Participants.

The British Pound Sterling (GBP/USD) delivered strong gains in 2025, supported primarily by sustained U.S. dollar weakness. In the first quarter, the pound climbed steadily as shifting expectations around U.S. monetary policy and growing concerns over the U.S. fiscal outlook weighed on the dollar.

This momentum extended into the second quarter, with unclear trade policy direction and deteriorating sentiment toward U.S. assets adding further pressure. The dollar regained some ground in the third quarter, paring earlier gains in the pound.

While the greenback was buoyed by positive economic data surprises and progress on trade agreements, the broader headwinds that had defined the first half of the year persisted—most notably the Federal Reserve’s return to rate cuts in September and the growing popularity of the USD debasement trade.

In the fourth quarter, dollar movements were more muted, as the market had largely priced in the Fed’s continued rate cuts in October and December. The British Pound Sterling (GBP/USD) ended 2024 only slightly negative, largely due to sharp losses in the fourth quarter.

However, British inflation also held up better than expected, dimming rate cut bets for the Bank of England, and provided some support on the downside.