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After a day of solid gains on the US stock market, the dollar climbed more than 0.6% on both the euro and the pound. It saw these gains despite positive economic news coming out of both the UK and Europe.
Following the UK’s above-expected GDP growth earlier this month, the International Monetary Fund says it’s reassessed the UK’s growth forecast. It now projects 1.2% growth in 2025, up from 1.1%. It’s good news for Chancellor Rachel Reeves, though it follows last month’s downgrade from 1.6%, so it’s effectively a softening of the hit.
The IMF also pushed Reeves to change her fiscal rules to allow more government borrowing. The group claims Reeves’ fiscal headroom is too small to deal with economic shocks like those we’ve seen throughout 2025.
This morning, property portal Zoopla revealed UK homeowners are selling for 4.5% below asking price. May’s been a busy month for home sales, climbing by more than 6% since this time last year. Despite this increased activity, because there are 13% more homes on the market, buyers are free to offer below asking.
The dollar climbed throughout Tuesday, ending more than 0.6% up on both the pound and the euro. The growth was fuelled by a swelling stock market, which was reacting to the news that US President Trump’s claim that his government is making progress on a trade deal with the EU and that he had agreed to delay instituting 50% levies on the bloc.
However, behind the news of the growing stock market was the story that US houses prices were down slightly when they had been forecast to grow. This hint of a downturn could suggest the direction of travel for the US GDP growth rate due to be announced on Thursday – data that will show the impact of Trump’s tariffs.
The euro was level with the pound throughout Tuesday which is to say it was similarly trailing the dollar. This was despite data showing German consumer confidence and Eurozone economic sentiment were both up.
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GBP: No gains, despite IMF confidence
The pound was level pegging with the euro throughout Tuesday and trailed the dollar by 0.6%, despite getting a minor vote of confidence from the IMF. The group has upgraded its growth forecast for the UK, though it also called on Chancellor Rachel Reeves to refine her fiscal rules.
GBP/USD past year
EUR: Flat day for the euro, despite positive outlook
Like the pound, the euro trailed the dollar on Tuesday trading. Even increased consumer confidence and Eurozone economic sentiment did nothing to fuel gains.
EUR/USD past year
USD: US traders hope for EU trade deal
The US stock markets surged on Tuesday as US President Donald Trump hinted at progress towards a trade deal with the EU. Over the course of the day, the dollar climbed 0.6% on the pound and euro. Though, with GDP growth data due on Thursday, numbers which will reveal the impact of Trump’s tariffs, tension is growing.
USD/GBP past year
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