Yesterday, going into the 4pm fix, GBP finished the day strong with GBPUSD climbing to its highest level since 18th December. The positive risk sentiment got a boost in the afternoon after Trump confirmed Volodymyr Zelenskiy will visit the US on Friday, potentially to seal the resources deal.
Yesterday evening, Trump gave a series of contradictory answers about his plans to enact tariffs on Canada and Mexico, including that he has no intention of halting the tariffs that were postponed last month, only to then later on go on to say that these won’t be implemented until 2nd April. It's unclear if this was intentional or not. Trump also went on to announce 25% tariffs on the European Union beginning on 2nd April.
*Daily move - against G10 rates at 7:30am, 27.02.25
** Indicative rates - interbank rates at 7:30am, 27.02.25
The EUR is marginally weaker because of Trump's tariff comments last night. One would think that the losses on the currency would have been more substantial but perhaps markets have learnt to live with the threat of tariffs or are simply leaving dealing with them for when they are actually enacted.
For the rest of the day we have consumer confidence numbers from Europe as well as second estimates of GDP and core PCE from the US for the final quarter of 2024. However, we don’t expect these to be major market movers.
As we settle into month end, the inclination is to think that we will likely see both GBPUSD and EURUSD trade near recent resistance levels with the soft USDnarrative continuing.
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