- Pound (GBP) falls for a second straight day
- The market mood slumps on trade war fears
- Euro (EUR) rises but falls against USD
- Eurozone could retaliate
The Pound Euro (GBP/EUR) exchange fell for a second day on Friday. The pair fell 1.08% in the previous session, settling on Thursday at €1.1851. It traded between €1.1834 and €1.2018. At 21:00 UTC, GBP/EUR is trading -0.72% at €1.1769. The pair fell 1.5% this week, its worst weekly performance since early March.
The pound is slumping against the Euro and the USD as risk-off sentiment dominates the market mood. Investors are selling out of riskier assets and currencies as global trade war fears rise.
Trump announced 10% trade tariffs on the UK on Wednesday, which Kier Starmer hopes will be removed quickly once a trade deal is agreed.
However, the bigger concern is the prospect of a global economic slowdown after Trump’s trade tariffs and the retaliatory measures now announced by China—the prospect of a trade war between the world’s two largest economies.
The UK economic calendar is quiet today. Attention is turning to next week’s UK GDP data on Friday. The UK economy contracted by 0.1% month-on-month in January and is expected to rise by 0.1% in February.
The EUR is rising against the pound but falling against the USD as the market weighs up the impact of the escalating trade war. Europe has been hit with 20% trade tariffs, which will take effect on April 9.
The European Union has said that it will retaliate if talks in Washington don’t proceed favourably. The EUR has experienced heightened volatility this week, benefitting from USD weakness earlier in the week.
However, stock markets across the region have fallen sharply on fears over the impact on growth. The Euro Stoxx 50 trades 4% lower on Friday, following a 3% decline yesterday.
There is no high-impact Eurozone data today. Attention is turning to retail sales figures next week. However, data is likely to play second fiddle to any trade tariff developments.
