Trump continues to dominate headlines
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Daily Currency Update
President Donald Trump confirmed on Monday that 25% import tariffs on Mexico and Canada are set to go ahead as both nations have now run out of room to negotiate a deal. There will also be an additional 10% surcharge on imports from China, taking the total levy imposed on importing Chinese goods to 20%. Analysts are now factoring in a likely increase in inflation and will cut into corporate profits. There are also concerns that a trade war will begin with it widely anticipated that China will retaliate, imposing 15% tariffs on goods such as chicken and wheat, and 10% on other goods like fruits' and vegetables. Canadian Prime Minister, Justin Trudeau is also due to impose 25% tariffs on some US goods. The European Union look like the next location to be hit with ‘Trump Tariffs’ with 25% levies expected on European-made cars.Both the GBP and the EUR have picked up against the US Dollar, breaking back through 1.2700 and 1.0500 respectively. GBP/EUR continues to hover around 1.2100, opening this morning at 1.2090.
Key Movers
As news and updates on tariffs will likely take away focus from macroeconomic data, there is news elsewhere to monitor. President Trump has paused military aid to Ukraine following his clash with Ukrainian President Volodymyr Zelensky last week. This move increases the pressure on Zelensky to accept a deal to open up Ukraine’s minerals to U.S. investment, and a push towards peace talks. This adds pressure to Europe, as the European Central Bank is expected to cut interest rates again this week. The reduction in monetary policy is expected to bring the key rate down another 25 basis points to 2.50%. The Eurozone inflation dipped to 2.4% in February, so the reduction is aimed to stimulate an economy that has been stagnant for nearly 2 years.Expected Ranges
- GBP/USD: 1.2610 - 1.2770 ▲
- GBP/EUR: 1.2060 - 1.2150 ▲
- GBP/AUD: 2.0220 - 2.0590 ▲
- EUR/USD: 1.0420 - 1.0560 ▲