Trump tariffs hold headlines
Daily Currency Update
Eurozone inflation rose to a hotter-than-expected 2.5% in January on an annual basis, data showed on Monday. The main reason for the jump was put down to rising energy costs. Core inflation came in at 2.7% in January, seeing no change since September, but services inflation fell 0.1% month-on-month. US manufacturing held the macroeconomic headlines yesterday afternoon. A return to expansion for the sector was seen for the first time since April 2024, with the release coming in above 50.00 at 50.9, also beating expectations.Key Movers
Trumps Tariffs continue to dominate currency volatility in the past 24 hours. Fears over the impact of Trump's announced 25% tariffs on Mexico and Canada weighed on markets at the start of Monday, but the concerns were somewhat eased after the president said he had agreed to delay the levies on Mexico by one month. This was extended to Canada after leaders from both countries agreed to boost security at their respective borders with the U.S. in response to calls from Trump to crack down on drug smuggling and illegal immigration.However, a 10% surcharge on goods incoming from China took effect on Tuesday sparking retaliatory measures from Beijing. China’s finance ministry said it will impose a 15% tariff on coal and liquified natural gas imports from the U.S., and an additional 10% duty on crude oil, agricultural equipment and automobiles from February 10.
It seems the EU and potentially the UK will be dragged into the Trump Tariffs, which is causing uncertainty. GBP/USD opens up back above 1.2400, with the UK looking the most likely to get an easier trade agreement. EUR/USD has recovered some of its losses, but still sits below 1.0350. GBP/EUR touched 1.2060 at the high on Monday and trades above 1.2000 this morning.
Expected Ranges
- GBP/USD: 1.2360 - 1.2480 ▲
- GBP/EUR: 1.1980 - 1.2060 ▲
- GBP/AUD: 1.9960 - 1.2130 ▲
- EUR/USD: 1.0280 - 1.0460 ▲