Pound Sterling Slides vs Euro After UK 10% Tariff

April 3, 2025 - Written by David Woodsmith

STORY LINK Pound Sterling Slides vs Euro After UK 10% Tariff

The Pound to Euro (GBP/EUR) exchange rate fell back overnight, after markets reacted to the April 2 US Tariffs.

At the time of writing, GBP/EUR traded at 1.1951, a 0.41% decline on the daily opening levels.

GBPEUR had struggled for momentum on Wednesday as investors exercised caution ahead of US President Donald Trump’s impending tariff announcement.

The Euro (EUR) found little support on Wednesday as traders hesitated to take strong positions before Trump’s tariff decision.

The European Union has frequently been the target of Trump’s criticisms over trade imbalances, leading to concerns that the Eurozone economy could face significant disruptions if US tariffs are extended to European goods.

Adding to the uncertainty, European Commission President Ursula von der Leyen has reiterated that the EU is prepared to retaliate against any aggressive US trade measures, potentially imposing tariffs on American products such as motorcycles, whiskey, and denim.

EUR investors fear that escalating tensions between the US and EU could lead to a prolonged trade conflict, further undermining the Eurozone’s economic outlook.

The Pound (GBP) saw little movement on Wednesday as reports suggested that UK officials had yet to secure exemptions from Trump’s latest round of tariffs.

While discussions between Prime Minister Keir Starmer and President Trump have been described as constructive, no immediate resolution is in sight.

Even if a deal is reached in the future, GBP investors fear that the UK’s open economy remains vulnerable to disruptions in global trade.

Looking ahead, in addition to the fallout from Trump’s tariff announcement, the Pound to Euro exchange rate may also be influenced by an upcoming speech from European Central Bank (ECB) Vice President Luis de Guindos on Thursday.

If de Guindos signals that the ECB may need to implement more accommodative policies in response to Trump’s tariffs, the Euro could face additional downside pressure.

Meanwhile, the UK’s latest services PMI could provide some support for the Pound, particularly if the finalised March figures confirm a strong performance in the sector.

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TAGS: Pound Euro Forecasts