Welcome back to the IFX Payments Market Update. Trump’s tariffs have entered a legal battle. We look at what that means for some of the major currencies below. There’s some positivity… and a lot of uncertainty. Read on to find out why.
Current rates
| Currency pair | Rate |
|---|---|
| eur usd | 1.1416 |
| gbp eur | 1.1867 |
| gbp usd | 1.3547 |
Rates correct as of 08:41am on Monday 2nd June but may now have changed.
The Big 3
Three stories covering the latest developments in economies, currencies and borders.
Euro outlook swings on tariff news
The Pound to Euro exchange rate uptrend has ended and despite recent developments, the outlook is uncertain. A deeper setback is possible although it did rally last week after the reinstatement of Trump's tariffs. When trade anxieties are rising, the Euro tends to take precedence over the dollar and does well against most other major currencies.
Dollar could fall a further 9% next year with slowing growth
The dollar has harder days ahead and according to predictions by Morgan Stanley will tumble to levels last seen during the Covid-19 pandemic by the middle of next year. Interest rate cuts and slowing growth are to blame. The euro, yen, and Swiss franc are expected to benefit from this weakness. The outlook on the currency is already sour, but this will only add more concern.
More BoE interest rate action expected
The UK economy will grow slightly more than previously thought in 2025, according to the IMF. With a 'gradual easing of monetary policy' there is a much better outlook and expected further reduction of interest rates. The increase is slight however (1.2% growth as opposed to 1.1% forecast in April) and still less than IMF's Jan forecast.
[MSN]
Recap
Tariffs illegal but still in place… for now
The US Court of International Trade ruled that Trump's global tariffs exceeded presidential authority and were issued illegally. Markets got a boost, and the White House were incensed. An appeals court allowed the tariffs to stay in place until this legal tussle is completed. So, despite the initial victory for free-trade advocates we now enter a protracted period of uncertainty that threatens to complicate trade negotiations with allies including Britain. The president's tariff agenda - a cornerstone of his economic policy - now hangs in legal purgatory, with the Supreme Court likely the final arbiter.
Looking forward
Today - US ISM Manufacturing index published
Tuesday - EU, Switzerland and Turkey report major inflation and unemployment data
Thursday - ECB monetary policy interest rate results and commentary
EU - employment change, Retail Sales, PPI and GDP
Friday - US non-farm payrolls and other labour data
Here's what we're talking to our clients about
We’re at Money20/20 this week! If you’re there, be sure to say hi to the team on the ground.
Here are some of the conversations we’re having:
- What interest rate forecasts mean for businesses as the topic of divergence creeps in
- Working with PSPs on growth
- Our award nominations – Best Cross-Border Payments anyone? 👀
The contents of this article do not constitute financial advice and are provided for general information purposes only.
