The EU faces continued negotiations to reduce 30% tariffs brought on by President Trump. Tariff deals already struck, the UK has bigger problems to deal with, following another month of contraction to the economy. Read this week’s market update for more.
Current rates
| Currency pair | Rate |
|---|---|
| eur usd | 1.1679 |
| gbp eur | 1.1534 |
| gbp usd | 1.3472 |
Rates correct as of 10:15am on Monday 14 July but may now have changed.
The Big 3
Three stories covering the latest developments in economies, currencies and borders.
EU considers alternatives following renewed US tariff threats
Unless better trade terms can be negotiated the EU and Mexico will have 30% tariffs on imports from 1 August, according to President Trump. The EU, led by Ursula von der Leyen, has extended the suspension of its trade countermeasures against the US until the same date to allow for continued discussions. The bloc has prepared significant retaliatory measures worth €21 billion, and there were suggestions today that they are also coordinating with other affected countries including Canada and Japan. The Euro is trading cautiously against its peers as negotiations continue throughout the week.
UK sees disappointing economic growth that could weigh on GBP
The UK economy contracted 0.1% in May, marking the second consecutive monthly decline and falling short of expectations for a return to growth. This unexpected weakness has put pressure on the Pound, with GBP/EUR dropping to 1.1547 and GBP/USD falling to 1.35 as markets react to concerning data including declining industrial production and a widening trade deficit. Living standards remain unchanged from when Labour took power a year ago, while discretionary incomes have fallen 7.5% this year, creating additional economic headwinds. The weak economic performance is prompting expectations that the Bank of England may accelerate interest rate cuts, further weighing on Sterling. Meanwhile, Chancellor Reeves faces mounting fiscal pressures with concerns about debt sustainability. There’s speculation that she may target the financial services sector or wealthy individuals with tax increases to boost government revenues.
Trump puts increasing pressure on Powell to step down
Trump continues to tangle with Fed chair Jerome Powell. A Trump official said in a letter to Powell “The President is extremely troubled by your management of the Federal Reserve System.” This is the latest in a string of attacks against the Central Bank Chief who the president feels is mishandling interest rates. Despite this pressure increasing, the markets don’t seem to back up the idea that he’s about to leave. Were he to exit, it’s likely the dollar would drop to a four-year low.
Looking forward
Monday: China reports trade data, EU trade ministers meet in Brussels to discuss tariffs.
Tuesday: US and Canada CPI, China reports GDP, Big US banks incl. JPMorgan Chase, Wells Fargo, Citigroup and Blackrock report earnings, and more banks on Wednesday.
Wednesday: UK and Italy inflation data, US Federal Reserve speeches.
Thursday: The UK reports jobs and earnings data, the Eurozone reports CPI, US retail sales.
Friday: Japan reports CPI.
Here’s what we’re talking to our clients about
We’re always here to support. Here are some of the conversations we’re having:
- How the proposed tariffs effect their business/supply chain.
- Respite in the GBPUSD trend.
- What a slowdown in UK economic growth means.
The contents of this article do not constitute financial advice and are provided for general information purposes only.