Trump gives us something to TACO about

Yesterday's currency recap

FX markets were relatively steady, after Trump avoided escalating currency or trade rhetoric during a closely watched speech in Switzerland. While he doubled down on interest in Greenland, the absence of fresh threats was enough to calm nerves, giving a boost for risk appetite. Overall, markets took the speech as a relief rather than a resolution, with geopolitical uncertainty still lingering in the background.

GBP was little changed after CPI surprised slightly to the upside at 3.4% YoY, though the data did little to shift expectations for a gradual BoE easing path.

Today's GBP rates

Key data points

What we think

Risk appetite is back in the markets this morning after Trump backed off of threats on imposing tariffs on European nations opposing his efforts to take control of Greenland. Trump also cited that he is working on a framework for a future deal with NATO.

Today's focus is on US Q3 GDP and core PCE. GDP is expected to confirm a solid but cooling economy, with only minor revisions likely. The bigger market mover is core PCE, the Fed’s preferred inflation gauge. A soft print would reinforce expectations for rate cuts later this year and weigh on USD, while any upside surprise could push back against the recent dovish shift in rates.

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