- The EUR/GBP is increasing as the EURO gains strength after the EU decided to continue suspending its retaliation measures against US tariffs.
- President Trump has announced a 30% tariff on imports from the European Union and Mexico.
- The pound is under pressure due to disappointing GDP figures from the UK, raising expectations for potential rate cuts by the Bank of England in August.
The EUR/GBP is set to gain for a second straight session, trading at around 0.8670 early Monday in Europe. This increase is supported by the EURO, bolstered by the US tariff suspension until early August as announced by the European Union on Sunday, in hopes of reaching a negotiated agreement.
On Saturday, President Trump revealed the 30% tariffs on imports from the European Union and Mexico, effective August 1.
German Prime Minister Friedrich Merz emphasized his commitment to securing trades, warning that tariffs could become central to Germany’s export-reliant economy. Ursula von der Leyen noted that the EU has not fully prepared its response, stating, “we’re not there yet.”
On Monday, Italian Foreign Minister Antonio Tajani mentioned that the EU is readying a retaliatory tariff list worth 21 billion euros against the US if negotiations fail. He stated that new QE programs from the ECB ought to take into account the possible impact of US tariffs.
The EUR/GBP finds support as the British pound faces challenges following the recent disappointing UK GDP and manufacturing data. The reported economic downturn could prompt the Bank of England to consider reducing interest rates at its August meeting.
