Pound Euro Exchange Rate Softens following Trump Tariff Announcement

November 27, 2024 - Written by Frank Davies

STORY LINK Pound Euro Exchange Rate Softens following Trump Tariff Announcement

The Pound Euro (GBP/EUR) exchange rate slipped on Tuesday following Donald Trump’s proposed tariff plans.

The Euro (EUR) gained ground against most currencies on Tuesday following the revelation of Donald Trump's latest tariff proposals for the United States.

In the wake of Trump's election victory less than a month ago, EUR exchange rates had slipped amid market concerns that Trump could introduce new tariffs on Europe, weakening the common currency.

However, Trump has now proposed a 25% tax on goods entering the US from Canada and Mexico, once again rattling markets.

Notably, his initial plans made no mention of Europe, which allowed EUR exchange rates to rise against its counterparts on Tuesday.

Chris Turner, Global Head of Markets at ING, noted in a published comment:

'The fact that Europe was not included in Trump’s initial tariff announcement could perhaps be seen as positive news for the continent.’

The Pound (GBP) had a varied performance against most currencies on Tuesday, appreciating against the Canadian Dollar (CAD) and the US Dollar (USD), but depreciating against the Euro, with little change elsewhere.

The lack of significant UK data releases, combined with a cautious market sentiment, restricted the British currency's movement.

In the absence of substantial UK data, GBP exchange rates were primarily guided by market risk appetite.

As the Pound becomes increasingly sensitive to risk, Tuesday's nervous trading conditions contributed to Sterling remaining largely unchanged during the European trading session.

GBP/EUR Exchange Rate Forecast: German Data in the Spotlight

Looking ahead to Wednesday, the key catalyst for the Pound Euro exchange rate is expected to be the release of Germany's latest GFK consumer confidence data.

If the index confirms another downturn in consumer sentiment within the Eurozone's largest economy, the Euro is likely to weaken during mid-week trading.

As for the Pound, UK data will once again be sparse on Wednesday, leaving GBP exchange rates to be primarily influenced by market sentiment.

Will a shift towards more optimistic trading conditions be sufficient to boost GBP exchange rates? Or will market anxiety persist, keeping Sterling under pressure?

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TAGS: Pound Dollar Forecasts