Global Sentiment rallies as tariff hopes improve
Daily Currency Update
The pound has benefitted from an increase in global risk sentiment as Trump’s tariffs take another twist with negotiations ongoing.As the market moves on from sterling’s wobbles last week at the hands of Chancellor Reeves and PM Starmer, GBP has ticked up against its major peers taking advantage of the current upbeat global conditions but for how long will this last?
The pound’s recovery can be aided to another push back in the tariff implementation deadline as the 9th of July cliff edge for April’s ‘reciprocal tariffs’ will now pass without incident.
With a new, more flexible deadline of August 1st being set for all nations. Monday did see a drop in markets as the US sent out letters detailing increased levies from major exporters to the States, however it seems many nations are keen on seeking a deal as Trump indicates there is room for manoeuver.
As a result GBP has managed to rebound from the monthly lows of last week against the EUR, a EUR that has benefitted from stimulus stronger then expected as investors look for non US alternatives and also maintain good levels against the buck.
However the latest concessions to welfare cuts imply a more complicated path for UK growth with further tax hikes expected.
Key Movers
Elsewhere we have seen the European and Asian markets open in positive territory with risk-on currencies gaining and improvements in commodity currencies such as the NZD and AUD.It is reported that the EU and US could settle on an initial trade deal as early as this week which is suggesting the bloc are happy to accept a 10% baseline tariff from the states, a material improvement on Aprils 20%.
Global sentiment will also benefit from the prospect of a trade deal between the US and India, as the President suggests the agreement is close whilst Treasury Secretary Bessent states his ‘inbox is full of trade offers’.
Overnight we also saw the Reserve Bank of Australia hold interest rates as 3.85% whilst the market was anticipating a cut.
Despite a 25 point rate cut being expected, it is suggested the RBA are a little too concerned on inflation threats if the rate is decreased too quickly. This has resulted in widespread gains across the board for AUD as the central bank will be more re-active as the economy is showing good signs.
Expected Ranges
- GBP/USD: 1.3605 - 1.3665 ▲
- GBP/EUR: 1.1575 - 1.1635 ▼
- GBP/AUD: 2.0725 - 2.0950 ▼
- EUR/USD: 1.1725 - 1.18 ▲