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The pound moved up again against the euro yesterday as the summit between Prime Minister Starmer and President Trump appeared to show limited scope for tariffs and even the possibility of a trade deal.
Sterling lost some ground against a US dollar riding high on the news on tariffs and outperforming most other currencies.
Trump confirmed that tariffs would go ahead against Canada and Mexico, presumably at the previously mooted 25%, and against China at 10%. This led to a stronger dollar across the board, although in a news conference he said that Starmer “was working hard” to convince him against tariffs, and a trade deal might make tariffs unnecessary.
Also yesterday, US Gross Domestic Product (GDP) was confirmed to have slowed down to an annualised 2.3% for the final quarter of 2024. Government expenditure rose, presumably for the last quarter for a while if the Elon Musk-led Department of Government Efficiency (DOGE) has its way.
Elsewhere in the world yesterday, tech was on the march, with Nvidia, Amazon and Broadcom shares all rising in excess of 2%. However, there was a warning from Deutsche Bank that so much spending on AI ($340bn annually) could be an investment bubble liable to burst.
One company really struggling with tech is Ocado, which is making 500 job cuts in its R&D workforce, as it announced losses close to £400mn for the second year running.
Make sure any upcoming transactions are protected against the risks of sudden market movements. Secure a fixed exchange rate now with a forward contract; call your Business Account manager on 020 3918 7255 to get started.
GBP: Month ends on a high
Sterling has reached the end of February in a better place than it began it, some 1.1% up on USD and 1.3% up on the euro. A quiet week for data has ended with the Nationwide House Price index, which showed prices rising by 0.4% in February to an annualised 3.9%.
GBP/USD past year
EUR: Inflation data rounds off the month
It was a sorry day for the single currency overall, although losses were held at just around 0.75% even against the US dollar. We have just heard French inflation data come in at just 0.8% annually, a significant drop and well below the conventional 2% target. Italy’s and Germany’s will follow later today.
EUR/USD past year
USD: Tariff confirmation powers dollar
Yesterday’s confirmation that tariffs will commence against Canada, Mexico and China helped the dollar to a 0.5% to 1% gain on most rivals, including the pound. This afternoon we will get Personal Income and Spending data.
USD/GBP past year
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