Pound-Euro has been helped further over the past 24 hours as details of a pending trade deal between the U.S & Europe is getting closer to being agreed. Reports suggest that The U.S are set to introduce a 15% tariff for the majority of imports. It pretty much gives Europe the same parameters as Japan which means the initial 30% tariffs recently threatened will now be halved.
Sterling has been buoyed off the back of this as it now brings further clarity on the global trade outlook, which has led to investors entering back into more risk-classified assets. The EU have got an insurance policy in place which includes a set of tariffs on more than €90bn worth of American goods if a deal isn’t reached by next Friday – however the fact that the majority of trading partners are close to agreeing deals, this should now lift some uncertainty from the markets.
Looking ahead to this afternoon, we have the European Central Banks interest date decision. It’s expected that they will keep rates on hold after overseeing six consecutive rate cuts. This will mainly be down to cautiousness around whether a trade deal gets agreed and the implications moving forward. The guidance in the press conference will be key as the central bank won’t want to surprise markets too much given the current situation. It means they will more than likely keep the option open for another rate cut later this year, with markets signalling September for the next one. But with The European Central Bank due to end it’s cutting cycle before both The Bank of England and The Federal Reserve, we may well see some support for The Euro.
GBP/EUR 1.1517 GBP/USD 1.3554 GBP/AED 4.9796
GBP/AUD 2.0497 GBP/CHF 1.0751 GBP/CAD 1.8438
GBP/NZD 2.2403 EUR/USD 1.1756 GBP/ZAR 23.8726