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Trump tariffs on Mexico spark flight to safety

Daily Currency Update

GBP - British PoundGBP/USD drifted lower on Friday as risk was sold; equities were dragged lower and the dollar (against some currencies at least) and other safe haven currencies rallied. The catalyst was Trump's announcement that the US will be imposing new tariffs on imports from Mexico to try and curb illegal immigration, taking markets by surprise after it seemed like a United States-Mexico-Canada Agreement (USMCA) was close, and so soon after the White House lifted tariffs on aluminium imports from Canada and Mexico.The pound did bounce back into the end of the day as month end flows benefited the currency. But ultimately, the pound and euro remain pressured to the downside as political and Brexit uncertainty reigns in the UK. And looking to the week ahead, investors will be keeping a keen ear out for any further trade related comments from President Trump, this after he landed in the UK a few moments ago. There isn't much by way of UK economic data due for release - Services PMI is due on Wednesday and BoE Governor Carney is due to speak on Thursday on a visit to Tokyo.

Key Movers

As mentioned above, safe haven currencies were major benefactors of the risk off mood on Friday. The Swiss franc and Japanese Yen in particular strengthened with EUR/CHF falling by over 100 points and USD/JPY by almost 90 points, both in the one day.Looking ahead to this week, the RBA are due to make their monetary policy announcement later tonight, with investors expecting the Australian central bank to cut interest rates from 1.5%. Quarterly GDP is then due for release from Australia on Tuesday night/Wednesday morning. The ECB is also due to make its monetary policy announcement. Despite cutting growth and inflation forecasts in March, some experts expect the central bank to announce further cuts to forecasts on Thursday, which will likely heap further selling pressure on the euro.Later on in the week, US Non-Farm Payrolls are due. The consensus call for the May jobs report is for payrolls to increase by 190,000 with a 3.2% year-on-year increase in average hourly earnings.

Expected Ranges

  • GBP/EUR: 1.1260 - 1.1350 ▼
  • GBP/AUD: 1.8000 - 1.8360 ▲
  • GBP/NZD: 1.9150 - 1.9390 ▼
  • GBP/CAD: 1.7000 - 1.7160 ▼