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Following Monday’s early morning announcement of an agreement between China and the US to reduce their tariffs against each other, the dollar enjoyed a day of riding high against a basket of currencies. It gained more than 0.8% on the pound and 1.2% on the euro.
As the tension between the US and China slackened, traders moved their money out of safe havens, such as gold, and invested in riskier assets, such as stocks in industries hard-hit by US president Donald Trump’s tariffs. The shipping company Maersk, for instance, saw its share price rocket by 13%.
At the peak of Trump’s tit-for-tat tariffs, the US levied an additional 145% charge on all Chinese imports and China responded with a 125% on all US imports. These have now been reduced to 30% and 10% respectively. The US is still instituting its additional tariffs on steel and fentanyl.
The impact of this agreement won’t be factored into this evening’s US Bureau of Labor Statistics data. The organisation is expected to reveal that inflation has increased in the US, in large part because of Trump’s tariff policies.
UK unemployment data published this morning revealed the continued impact of chancellor Rachel Reeves’ budget, which increased employer National Insurance contributions. The unemployment rate has increased to 4.5%, having remained steady at 4.4% since November. The number of payrolled employees declined by 33,000, meaning that more than 100,000 fewer people are employed in the UK since this time last year.
Average earnings continue to rise, however, with both salaries including and excluding bonuses increasing by more than 5%.
This poor jobs news puts additional pressure on Thursday’s GDP data, which is already forecast to stay flat or grow just 0.1%.
The euro, which has sunk against the pound and the dollar in the past week, continued its decline against both currencies. However, later this morning, Germany is due to publish its economic sentiment index, which is predicted to show a sharp increase following last month’s shocking fall. April saw the steepest drop in Germany’s economic outlook since July 2023.
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GBP: Employment data paints dismal picture
The pound had a middling Monday, gaining 0.3% on the euro but falling 0.7% against the dollar. This morning’s employment data shows continued staffing reductions following chancellor Rachel Reeves’ autumn budget ahead of Thursday’s GDP data.
GBP/USD past year
EUR: Downward slope continues
The euro continued the past week’s decline against the pound and the dollar, losing 0.3% against the former and nearly 1% against the latter. Though, later this morning Germany is predicted to publish a boost in economic sentiment that may show renewed confidence in European markets.
EUR/USD past year
USD: A step down from the tariff war
The dollar had another strong day after the US reached an agreement with China for both superpowers to reduce their tariffs against one another. The news saw significant investment in US stock markets, and the dollar saw gains of more than 0.8% on the pound and 1.2% on the euro. This afternoon’s inflation numbers, however, are still forecast to increase.
USD/GBP past year
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