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Following a terrible Tuesday, the dollar continued to slide on Wednesday, hitting a four-month low against the pound. USD ended Wednesday down a further 1.3% on EUR and 0.8% on GBP. European countries enjoyed a huge boost following an historic German debt deal.
Already falling after Trump implemented 25% tariffs on Canadian and Mexican imports on Tuesday and doubled Chinese tariffs to 20%, the dollar tumbled further following the president’s address to Congress on Tuesday night. In his speech he reiterated plans for wide-ranging global import duties saying they would be implemented on April 2 and the statement sent the dollar to a four-month low.
Amid fears of a ‘Trumpcession’, Deutsche Bank says the dollar may even lose its safe-haven status.
Those worries grew when payroll operator ADP reported that there had been a slowdown in hiring in the months since Trump took office. Private employers added just 77,000 jobs in February, down from 186,000 the month before.
Speaking before the Treasury select committee on Tuesday, the governor of the Bank of England, Andrew Bailey, said Trump’s trade war posed a “substantial” threat to the British economy. Although the immediate impact of the dollar’s woes has seen traders buying sterling as they look for a more stable currency. By Wednesday’s end, the pound was up 0.8% on the dollar, and it’s 3.5% higher than this time last month.
In sharp contrast to America’s troubles, the euro had a stellar day after Germany’s Chancellor-in-waiting Friedrich Merz made an agreement with his coalition partners the SPD to set up a $500bn investment vehicle to fund infrastructure and defence spending. Investors welcomed the news fuelling the euro’s climb over the dollar.
Just last week, the euro fell because few expected Merz would be able to push such a deal through a government where his coalition holds such a slim majority. But, with the deal done, there is great expectation that Germany will be able to kickstart growth after years of economic stagnation.
With expectations of significant defence-led growth in Germany and other European countries, both the euro and sterling gained value through the day, with shares in defence companies jumping in value.
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GBP: Gains on dollar even as Trumpcession threat looms
Sterling gained 0.8% on the dollar on Wednesday, marking a 3.5% growth in the past month alone. However, the governor of the Bank of England says a trade war poses a “substantial” threat to the British economy.
GBP/USD past year
EUR: Stellar day for the euro
Following an historic investment agreement in Germany, the euro climbed 1.3% on the dollar and now sits more than 4% higher than last month. Chancellor-in-waiting Friedrich Merz’s deal has also sent stocks in German arms manufacturers and construction companies rocketing.
EUR/USD past year
USD: Four-month low as Trumpcession fears grow
The dollar hit a four-month low as President Trump’s tariffs against Canada and Mexico came into force. Data out of the US job market also spelled gloom, when companies hesitant to hire new workers in the face of all this economic uncertainty.
USD/GBP past year
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