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After boosts to the dollar on Monday driven by the news of an easing of tariffs with China, the currency slipped back on Tuesday. The pound and euro, which were neck-and-neck by day’s end, both gained more than 0.7% on USD.
The main news out of the UK on Tuesday was a data release from the Office for National Statistics showing increased unemployment, fewer job openings, and a softening on pay rises. None of which paint a rosy picture ahead of the GDP figures due to be published on Thursday.
However, even with this diminished job market, the Bank of England’s chief economist Huw Pill said that inflation may remain too high for the Monetary Policy Committee to vote through interest rate cuts in the future.
US inflation numbers published on Tuesday showed that, despite President Donald Trump’s tariffs, annual inflation had lowered by 0.1% from March’s 2.4%. However, analysts were quick to point out that, while these numbers cover the month when tariffs were implemented, they won’t yet show the impact of that shock to the market.
Following the tariff agreement with China on Monday, investment in US stocks continued throughout Tuesday, and the S&P 500’s 2025 losses have been reversed.
New data from the Centre for European Economic Research shows a huge swing in German economic sentiment. In April, the institute recorded a near two-year low in its survey for German industrial leaders. This month, that low of -14 has jumped by nearly 40 points to 25.2, way above forecasts of 11.9. The swing was driven by the recent interest rate cut and the reduction of the previous month’s US tariffs.
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GBP: Pound rises ahead of GDP data
The pound spent Tuesday climbing against the dollar, ending 0.7% up on USD. This was despite Office for National Statistics numbers showing a diminished jobs market and forecasts of slowing GDP growth.
GBP/USD past year
EUR: Huge positive swing on economic outlook
The euro climbed against the dollar, gaining 0.7% on USD and ending the day neck-and-neck with the pound. An economic survey revealed a huge swing in German economic sentiment, reversing a two-year low in April and returning to February levels.
EUR/USD past year
USD: US stocks restored after tariff agreement
While the dollar lost the momentum of its Monday bounce, ending 0.7% down on both the euro and pound, the US stock market showed a recovery. Following US president Donald Trump’s agreement to reduce tariffs on China, the S&P 500 saw all its 2025 losses restored.
USD/GBP past year
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