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US president Donald Trump’s late-in-the-day U-turn had an immediate impact on the market on Wednesday evening. The euro, which had been strengthening through the week as traders looked for a safer place for their money, lost 0.9% against the pound and 0.7% against the dollar.
Wednesday began with continuing selloffs in the Asian and European markets and there were signs that traders were selling their US and UK government bonds. This lack of trust in a commodity that is effectively a financial foundation of the global economy, spread fear through the markets.
Then, after the European markets had closed, Trump announced a 90-day pause on his trade tariffs for all countries except China. He claims the world’s second largest economy had shown the US a “lack of respect”.
The impact on the US markets was immediate, with the S&P 500 soaring in value. By the end of trading the stock index was up 9.6%, one of its biggest days since the Second World War.
While European stock markets had closed, currency markets revealed relief globally. The pound, which at one point in the day reached its lowest point against the euro since January 2024, began to climb. By the end of the day, it was up 0.9% on the euro and 0.2% on the dollar.
After a week of losses, GBP is still down overall by 1.8% on EUR and USD since April 3, but it’s a welcome change of pace.
In non-tariffs news, the UK Residential Market Survey revealed that house prices have largely stalled in recent months, increasing just 2%, well below the 10% forecasts. The news, on top of all the turmoil of recent tariffs, doesn’t paint a rosy picture for UK growth ahead of Friday’s GDP numbers.
This afternoon, the US will post its latest inflation rate data. Core inflation is forecast to increase slightly, which may add to concern that the Fed won’t cut interest rates any time soon, but the numbers will also help the analysts who are trying to project whether the US economy is headed for a recession.
So there is plenty of potential life left in the currency markets today. 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: Regaining lost ground
After a week of losses, the pound has begun to gain on the euro and dollar. Sterling climbed nearly 1% on both currencies, although it’s still down overall from where it was this time last week. UK growth figures will be published tomorrow, though flat house prices suggest few gains.
GBP/USD past year
EUR: Markets set to rally
The euro strengthened significantly in the last week as traders looked for a safer currency, but Trump’s tariff U-turn has seen that swelling ease. EUR is down 0.8% against USD and 1.1% against the pound. Market futures suggest EU stocks are set to rally throughout the day.
EUR/USD past year
USD: Tariff U-turn sees stocks rally
After a week of turmoil and trillions wiped off the stock market, Trump’s U-turn on tariffs sent the US markets rocketing. The dollar is nearly up 1% on the euro, a sign its freefall has ended.
USD/GBP past year
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