The Dollar regained some ground yesterday against both Sterling & Euro on 2 fronts. Firstly, Trump’s effective U-turn on the 50% tariffs for Europe set to begin on June 1st but now being delayed until 9th July has helped bring lift consumer confidence up last month from what was almost at a 5-year low. The confidence levels rose by over 12 points to represent the biggest monthly gain in 4 years, hitting 98. Crucially, The US & China coming to an agreement last month to lower the massively increased tariffs on each other, coupled with Monday’s announcement that negotiations are underway with The EU have gone some way to aiding confidence levels across all ages.
Moving our focus to this morning, Germany, Europe’s largest economy is facing pressure as the number of unemployed people has unexpectedly risen by more than forecasted. The reported figure of individuals currently out of work had already reached a ten-year high in April, has now cast more pressure with a further 34,000 added to the total. More worryingly was the fact analysts were only expecting an increase of 10,000. We know Germany are under new leadership, but this will be of massive concern especially as we are still to find out the outcome of the bloc’s negotiations with Trump.
The other main focus today will be the release of The Federal Reserve’s meeting minutes from their policy meeting just a few weeks ago. Investors will be paying close attention to the Federal Reserve’s assessment of current economic conditions and any further comments on interest rate guidance. As we know, they opted to keep interest rates at current levels with chair Jerome Powell indicating that the possible impacts of the tariffs are still highly uncertain, but crucially if tariffs remain high then that could well lead to higher inflation and unemployment. If this is echoed again this evening, it would be fair to say a rate cut would be firmly off the cards.
GBP/EUR 1.1915 GBP/USD 1.3496 GBP/AED 4.9597
GBP/AUD 2.0949 GBP/CHF 1.1160 GBP/CAD 1.8654
GBP/NZD 2.2610 EUR/USD 1.1314 GBP/ZAR 24.1726