UK markets have opened up higher this morning after US President Donald Trump made another move in this ever-developing trade war, stating he would bring into play a 90-day tariff pause. The tariff pause brings in a new temporary reduction of rates, lowering them to a blanket 10% for the majority of US trading partners.
The reason we’ve also seen USD weakness is due to China being exempt from this reduction and now facing tariffs of 125% on any of their goods. China had earlier retaliated to Trump’s increased tariff rates of 104%, by hitting back with their own increases on American goods to 84%. Elsewhere we have also seen The European Union vote to approve their first set of retaliatory tariffs following the U.S steel and aluminium tariffs.
The Chinese Yuan has also hit a 17-year low, with their leaders due to meet today to set up additional economic stimulus after Trump increased tariffs further. Crucially China’s GDP projections have also been cut for the upcoming years, with Goldman Sach’s forecasting a drop from 4% to 3.5% in 2025, and a further drop in 2026 from 4.5% to 4% with these trade tariffs expected to hurt GDP overall by as much as 3%.
In terms of economic data releases, attention will turn to US Inflation figures for March. However, how much importance this will have on the markets right now is questionable when taking into consideration that these numbers will have been pre-tariffs. As much as a drop in inflation will weigh heavy on The Federal Reserve, the figures for May and June in particular may be of more significance.
GBP/EUR 1.1663 GBP/USD 1.2863 GBP/AED 4.7252
GBP/AUD 2.0926 GBP/CHF 1.0903 GBP/CAD 1.8119
GBP/NZD 2.2699 EUR/USD 1.1021 GBP/ZAR 24.9961