- Pound (GBP) rises, adding to gains last week
- UK hopes to avoid tariffs given the balanced trade with the US
- Euro (EUR) falls on trade tariff jitters
- German inflation cooled to 2.2%
The Pound Euro (GBP/EUR) exchange is rising, adding to gains last week. The pair rose 0.06% in the previous week, settling on Friday at €1.1948. It traded between €1.1915 and €1.2028. At 13:00 UTC, GBP/EUR is trading +0.14=8% at €1.1970.
The pound is rising against the euro but falling against the US dollar as Britain hopes to negotiate a deal with the US to avoid Trump’s reciprocal trade tariffs this week.
Prime Minister Keir Starmer said there were productive negotiations on the UK-US deal in a phone call on Sunday evening. Given its more balanced trading position with the US, the UK is expected to be less affected by Trump’s tariffs.
There is no macroeconomic data due today. Industry figures today have been encouraging. According to Adzuna, UK job vacancies rose by the most in three years in February, a contrast to the broadly gloomy outlook for the economy. The job search company reported a 3.7% increase in vacancies compared to January; however, they were still down compared to February 2024.
Meanwhile, UK mortgage approvals fell to a six-month low in February, ahead of a rise in capital gains tax, which will take effect this week. Lenders approved 65,481 mortgages in February, which was below the expected 66,000.
The euro is under pressure amid growing concerns over Trump’s trade tariffs, which could slow growth in the eurozone region. German automakers, pharmaceutical giants, chipmakers, and industrial companies could be impacted.
Meanwhile, German inflation data showed that the consumer price index in the eurozone’s largest economy cooled 2.2% down from 2.3% in February. On a monthly basis, CPI is 0.3% from 0.4%.
The data support the view that the ECB will cut interest rates by 25 basis points again at the April meeting, following a rate cut in March. Eurozone inflation data is due tomorrow.
