The story of this morning is Trump’s announcement of a trade deal with Japan which has relieved concerns of a potential full-blown global trade war. Trump detailed a tariff rate of 15% on imports from Japan, notably down from the initial 25% which was due to take effect from 1st August. Off the back of this, we’ve seen The Dollar lose ground against both GBP & EUR as traders now see less risk of a trade war as mentioned above.
Moving into the afternoon, we have Euro Consumer Confidence figures released for July. Consumer sentiment looks to have improved again for a sixth consecutive month with some weight being linked to The European Central Bank having overseen an interest rate cut last month, as well as putting some potential on a further interest rate cut in September. Figures suggest confidence will have climbed from -15.3 to -15, so albeit a slight improvement, there is still a long way to go before confidence is in a better position.
Sticking with Europe, The European Central Bank have their interest rate decision tomorrow afternoon. After cutting interest rates last month for the eighth consecutive meeting, policy makers are expected to keep rates on hold with uncertainty around potential tariffs from The U.S. The latest rumour-mill is pointing towards Donald Trump leaning towards implementing 15% and 20% tariffs on all European Goods. As ever, the press conference after the decision will be key, as we hear the reasoning for their decision and what the path looks like moving forward.
Elsewhere, the markets will be waiting for further trade deal announcements with both Europe and China waiting in the wings. A pattern seems to be emerging of late, which is Trump laying down deal deadlines and then moving away from these as countries sit round the table to negotiate. Either way, any progress with both Europe and China could see further USD weakness.
GBP/EUR 1.1530 GBP/USD 1.3531 GBP/AED 4.9717
GBP/AUD 2.0557 GBP/CHF 1.0723 GBP/CAD 1.8384
GBP/NZD 2.2440 EUR/USD 1.1723 GBP/ZAR 23.7568