Pound to Euro Rate Slips following Trump’s Nomination for Treasury Secretary

November 25, 2024 - Written by John Cameron

STORY LINK Pound to Euro Rate Slips following Trump’s Nomination for Treasury Secretary

The Pound Euro exchange rate (GBP/EUR) edged lower on Monday as Donald Trump’s Treasury Secretary nomination helped calm concerns about US tariffs negatively impacting the Eurozone economy.

At the time of writing, GBP/EUR traded at €1.1986, down more than 0.3% on the day.

The Euro (EUR) strengthened on Monday, supported by its negative correlation with a weakening US Dollar (USD).

The decline in USD exchange rates followed the announcement that President-Elect Donald Trump had chosen Scott Bessent as his nominee for Treasury Secretary. Bessent, who has previously described Trump’s proposed tariffs as ‘maximalist’, advocated for a more measured approach, suggesting such policies should be implemented gradually.

Markets interpreted Bessent’s nomination as an indication that the incoming administration might adopt a softer stance on trade taxes than initially feared. This perception weakened the US Dollar, indirectly benefiting the Euro.

Additionally, the news eased concerns about a potential US-EU trade war, which could have a significant negative impact on the Eurozone economy.

Although the Pound (GBP) lost ground against the Euro on Monday, it managed to strengthen against other currencies following hawkish remarks from Bank of England (BoE) Deputy Governor Clare Lombardelli.

Speaking at a Bank of England conference, Lombardelli emphasised that the battle against inflation is far from over. She stated:

‘It’s too early to declare victory on inflation. It’s often been said that the last mile may be the hardest, and that’s where we are now.’

While these comments provided some support for the Pound against a range of other currencies, GBP/EUR experienced a slight decline.

GBP/EUR Outlook: Pairing to Waver on Downbeat Data?

Looking ahead, the British Pound could be influenced on Tuesday by the Confederation of British Industry’s (CBI) distributive trades survey, given the absence of more significant data releases.

Analysts predict another contraction in retail sales volumes this month, which would reinforce signs of a notable slowdown in the UK economy during the second half of 2024. If confirmed, this could weigh on Sterling.

Meanwhile, the Euro’s performance on Wednesday may hinge on Germany’s latest consumer confidence report. Persistent pessimism among German consumers, fuelled by political uncertainty and concerns over a potential winter recession, could put pressure on the single currency.

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TAGS: Pound Euro Forecasts