Tariffs taking the headlines

Yesterday's currency recap

GBP rallied across the board on continued risk appetite following the Ukraine summit, which also saw USD experience its biggest intraday plunge since 20th February.

Tariffs are dominating the headlines with China retaliating against the US with 15% tariffs on US agricultural goods and Canada striking back with 25% tariffs on US$107bn of US products.

Today's GBP rates

What we think

The FX markets have widely shrugged the tariff headlines off this morning, with yesterday's moves continuing the move lower for USD and a slightly stronger GBP. The obvious question is with all the news on tariffs, why is USD weaker? Could the markets have developed tariff fatigue? Or there are doubts that the tariffs will last? Or perhaps, there are chinks in the US exceptionalism story with the ISM manufacturing numbers yesterday pointing to slower-than-expected activity? Whatever the reason, these are more favourable levels for those buying USD.

For the rest of the day we look forward to President Trump's address of Congress, when the markets will be listening eagerly for any clues about his intentions for the economy.

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