Pound (GBP) wobbles on trade deal setback
The pound (GBP) initially struggled for direction on Wednesday as it became clear that the UK had failed to secure an exemption from US President Donald Trump’s sweeping tariff plans.
However, Sterling recovered some ground after Trump’s official announcement, as investors took solace in the fact that the UK will only face a 10% tariff.
Looking ahead, the pound may find some support today if the UK’s latest services PMI confirms a strong upswing in March’s economic activity.
Euro (EUR) volatile amid trade tensions
The euro (EUR) experienced choppy trade on Wednesday, with fears that EU retaliation to Trump’s tariffs could trigger a full-blown transatlantic trade war unsettling investors.
While these trade concerns pressured the single currency, a weaker US dollar (USD) offered some support to EUR exchange rates.
Later today, the European Central Bank (ECB) will release the minutes from its latest policy meeting. If they indicate that more policymakers see Eurozone interest rates as nearing a neutral level, the euro could find fresh demand.
US dollar (USD) slides as recession worries mount
The US dollar faced selling pressure on Wednesday as investors reacted negatively to Trump’s ‘Liberation Day’ tariff announcement.
Market sentiment soured as analysts warned that the broad-reaching tariffs could disrupt global trade and heighten the risk of a US recession.
Looking ahead, the ‘greenback’ could struggle later today if the ISM services PMI reveals a slowdown in US service sector growth last month.
Canadian dollar (CAD) jumps on tariff relief
The Canadian dollar (CAD) surged higher on Wednesday as traders expressed relief that Trump’s tariff announcement did not include additional levies targeting Canada.
Canada’s upcoming trade figures could inject further volatility into the ‘loonie’ today, as investors assess whether Trump’s earlier tariff threats impacted trade flows in February.
Australian dollar (AUD) sinks as China hit by fresh tariffs
The Australian dollar (AUD) broadly weakened overnight, with the currency’s close ties to China leaving it vulnerable to Trump’s decision to impose even steeper tariffs on Chinese imports.
New Zealand dollar (NZD) pressured by cautious market mood
The New Zealand dollar (NZD) also softened in overnight trade as risk-off sentiment continued to weigh on the ‘kiwi.’
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