Published: 03/03/2025 By ECAP
The British Pound strengthened as markets saw the UK as relatively insulated from U.S. tariff threats. Trump's confirmation of 25% tariffs on Canada, Mexico, and a 10% tariff on China raised concerns for other currencies, but the Pound held up well. The UK's neutral trade relationship with the U.S. gave it a safe-haven status, as the market believed the UK was less exposed to these tariffs compared to major exporters like the EU.
The Euro fell to a two-week low against the Dollar and lost further ground against the British Pound, impacted by risk aversion following President Trump's threat to impose tariffs. His comments about a 25% tariff on European imports, including cars, contributed to the decline. Ultimately, EU leaders warned of retaliation, while remarks from ECB officials increased expectations of a rate cut, further weighing on the euro as market sentiment remained cautious.
The U.S. Dollar strengthened for a second consecutive day, with the Dollar index rising 0.5% to 106.97. Investors reacted to President Trump's comments regarding potential tariffs, including a delay on levies against Canada and Mexico until April 2. Trump's remarks also hinted at a 25% tariff on European Union goods, which contributed to the Dollar's movement as markets awaited economic data on consumer spending and inflation.
Data supplied by GC Partners