Since the announcement of tariffs, one question has dominated the conversation: when will negotiations begin to calm the markets? So far, there have been no signs of progress, and as a result, market volatility continues to surge.
The US dollar has come under heavy selling pressure, with the DXY (US Dollar Index) breaking below 100, a significant technical level. The broader US stock market remains in uncharted territory, further feeding uncertainty. Investors have rotated out of the dollar, favouring EUR, CHF, and JPY as safer alternatives. Unsurprisingly, these three currencies have emerged as the strongest performers over the past week.
The GBP/EUR pair is nearing its worst weekly performance since 2022, currently breaking below the 1.15-level.
On a more positive note for sterling, fundamental UK economic data helped cushion losses against the euro and supported a rebound against the dollar. This morning’s GDP figures showed a 0.5% month-on-month increase, up from a flat reading last month—an encouraging sign for the UK economy. However, the question remains: can this momentum be sustained?
Given the UK’s status as a service-based economy heavily reliant on imports, any tariff-induced inflation in goods could weigh on future economic activity and growth.
Nonetheless, industrial and manufacturing production also showed improvements, further supporting the pound. As a result, GBP/USD has rebounded sharply, currently trading in the mid-1.30s, a solid recovery from the 1.27 low seen last Friday.
GBP/EUR 1.1475 GBP/USD 1.3050 GBP/AED 4.7942
GBP/AUD 2.1030 GBP/CHF 1.0640 GBP/CAD 1.8151
GBP/NZD 2.2559 EUR/USD 1.1362 GBP/ZAR 25.2942