- Pound (GBP) rises after losses last week
- Trump’s back-tracking lifts the market mood
- Euro (EUR) falls against the pound and USD
- The ECB rate decision is this week
The Pound-Euro (GBP/EUR) exchange rate is rising on Monday after steep falls last week. The pair fell 2.1% in the previous week, settling on Friday at €1.1513. It traded between €1.1440 and €1.1796. At 14:00 UTC, GBP/EUR is trading 0.8% at €1.1607.
The pound is recovering on Monday after steep losses against the euro in the previous week, and it continues to trade higher against the US dollar.
The pound is benefiting from the improved risk sentiment in the broader market after Trump announced a reprieve on tariffs on some tech imports from China.
Investors continue to consider how Trump’s trade tariffs could impact the UK economy. Bank of England policymaker Megan Greene said this weekend that it was unclear what Trump’s tariffs would do to UK inflation, particularly given the unpredictable behaviour of the US dollar.
The UK economy calendar is quiet today; attention will be on UK jobs data and inflation figures due later this week.
UK jobs data will be in focus as the minimum wage increase announced last year, along with the increase in National Insurance contributions by employers, is set to increase this month. Wage growth continues to see above-inflation increases, rising 5.9% in the three months to December.
The EUR is falling against the pound and the US dollar, giving back some of its recent strong gains. The euro has been a key beneficiary of the demise of the US dollar in recent weeks.
Attention this week is on the ECB meeting, which is expected to see the central bank cut interest rates by 25 basis points. This comes after the central bank seemed set for a pause after the March meeting. However, Liberation Day meant a pause was no longer an option. Trump’s trade tariff has brought back growth concerns to the eurozone, at least in the near term, which combined with falling energy prices add to deflationary forces.
