Daily FX Report – Sterling Stronger

Pound Sterling (GBP)

The Pound has remained resilient amid tariff negotiations involving other countries, as UK exports to the US account for only about 2% of GDP. Additionally, Prime Minister Starmer’s visit to Brussels, aimed at strengthening trade relations between the UK and the EU, is seen as a positive step. All eyes will be on the Bank of England’s interest rate decision tomorrow, where a 0.25% cut is expected. However, the MPC’s vote split and any accompanying statements are likely to be closely scrutinised.

 Euro (EUR)

The Euro remains under pressure as US President Trump has suggested that the Eurozone could be the next target for tariffs. Any further updates on this matter are likely to drive market volatility in either direction. Meanwhile, investors are awaiting speeches from ECB members in the coming days following Monday’s higher-than-expected Eurozone inflation figures, to assess whether their outlook on the future path of interest rates has changed.

U.S. Dollar (USD)

The US Dollar has weakened since the border agreement between the US, Mexico, and Canada was reached on Monday. The market’s focus has now shifted to China, where investors remain optimistic that a deal can be reached before China’s retaliatory tariffs take effect. Furthermore, markets remain sceptical about Trump’s declared intention to take control of the Gaza Strip and relocate Palestinians to neighbouring countries. If firm indications emerge that the US is preparing to deploy troops in the Middle East, the Dollar may strengthen due to its safe-haven status, as other Middle Eastern nations are likely to strongly oppose the move.