- Pound (GBP) rises for a second day
- PM Starmer heads to Washington
- Euro (EUR) falls after Trump pledges trade tariffs on the EU
- Eurozone economic sentiment improves
The Pound Euro (GBP/EUR) exchange is rising for a second straight day. The pair rose 0.33% in the previous session, settling on Wednesday at €1.2085. It traded in a range between €1.2039 and €1.2101. At 11:30 UTC, GBP/EUR is trading 0.12% at €1.2099.
The euro trades are under pressure as trade tariff worries rattle investors. Yesterday, Trump warned that 25% trade tariffs on the EU will be announced soon. During the first meeting of his cabinet since he took office in January trump said the EU was formed to screw the United States. He added that the decision had been made and would be announced very soon.
Europe’s stock markets traded lower, with automakers such as Porsche, Volkswagen, and BMW dropping sharply. The euro isn’t falling sharply, though, as there are still some doubts over whether the tariffs will go ahead, given the delays with Mexican and Canadian tariffs.
Meanwhile, on the data front, eurozone economic sentiment for February improved, rising to 96.3 from 95.3 in January. The data comes after a series of weaker-than-expected figures from Germany and after the German elections at the weekend.
The pound is edging higher as Prime Minister Kier Starmer heads off to Washington to meet with President Trump for talks on security and a possible ceasefire in Ukraine on the agenda. The meeting comes amid confusion surrounding trade tariffs. However, the pound could be an outperformer should reciprocal tariffs be applied because the trade deficit between the US and Britain is relatively small. If trade tariffs are implemented, the pound could perform its G10 peers.
Meanwhile, the pound has been supported by expectations of fewer rate cuts from the Bank of England than from other major central banks, such as the ECB.
The Bank of England cut rates by 25 basis points in February and the markets pricing in two more rate cuts this year.
