- Pound (GBP) falls for a second day
- UK grocery inflation remained at 3.3%
- Euro (EUR) rises even as European stocks fell sharply
- Trump applies trade tariffs to Mexico, Canada & China
The Pound Euro (GBP/EUR) exchange is falling for a second straight day. The pair fell 0.12% in the previous session, settling on Monday at €1.2106. It traded in a range between €1.2091 and €1.2131. At 14:30 UTC, GBP/EUR is trading -0.28% at €1.2072.
The euro has surged against the pound and the US dollar despite European equity markets falling sharply. The moves happen as President Trump applies trade tariffs to Mexico, Canada, and China, raising the likelihood that similar tariffs will be applied to Europe. As a result, European stocks are falling sharply. However, the euro is rising, benefiting from a weaker dollar amid fears that these trade tariffs could prompt an economic downturn in the US. Consequently, investors are selling out of the dollar and buying into the euro and the Japanese yen.
On the data front, eurozone unemployment figures were the only release. The data showed that unemployment remains at historic lows in the region at 6.2% despite the sluggish economic performance. Attention is turning to Thursday’s ECB interest rate decision, when the central bank is expected to cut rates by 25 basis points.
The pound is rising modestly against the US dollar but falling against the euro. On the data front, British grocery inflation remained unchanged last month, thanks to supermarket promotions. However, supermarkets have warned that tax increases coming from labour’s October budget, together with another increase in the national minimum wage, will add inflationary pressures this year.
Market researcher Kantar reported annual grocery price inflation of 3.3% in the four weeks to February 23, the same as last month, despite sales being up 3.6%.
UK headline inflation rose to a 10-month high of 3% in January, and the Bank of England projects a rise to 3.7% later this year.