- Pound (GBP) rises for a second straight day
- UK is unlikely to have an exemption
- Euro (EUR) rises despite trade tariff jitters
- Eurozone growth could be negatively impacted
The Pound Euro (GBP/EUR) exchange is rising after two days of losses The pair fell 0.04% in the previous session, settling on Monday at €1.1943. It traded between €1.1933 and €1.1979. At 17:00 UTC, GBP/EUR is trading +0.18% at €1.1964.
The pound is heading lower against the euro. Still, it trades higher against the US dollar as investors remain cautious ahead of President Donald Trump’s tariff announcements later today.
Despite Downing Street’s best efforts to secure an exemption from Tamp’s sweeping tariffs, talks of avoiding tariffs failed to result in an agreement. However, the UK is still hopeful that any tariffs imposed could be quickly reversed when a trade deal is agreed.
As part of a deal, the UK government is considering softening its approach to the digital services tax on technology companies, something that President Trump has claimed is discriminatory against US firms.
Still, the UK may be less impacted than other countries that have a larger trade deficit with the US, such as Europe, India, Mexico, and China.
The euro is rising as choppy trade continues amid a jittery mood ahead of Trump’s tariff announcement. ECB President Christine Lagarde warned that widespread tariffs would be a headwind for global growth.
Several ECB policymakers have warned about the impact of US trade tariffs on growth in the region, which they consider more worrying than the potential short-term increase in inflation.
In addition to the automotive industry, pharmaceutical companies and alcoholic beverage makers could also be in the firing line.
Inflation data yesterday showed that consumer prices eased in March to 2.2% year on year, down from 2.3% in February. The data supports the view that the central bank will cut rates again by 25 basis points in the April meeting, taking the lending rate to 2.25%. However, there is less clarity over what comes next.