Euro to Pound News: EUR Rally vs USD Drags GBP Lower on Global Trade Risks

April 3, 2025 - Written by David Woodsmith

STORY LINK Euro to Pound News: EUR Rally vs USD Drags GBP Lower on Global Trade Risks

The Euro currency rallied against the US Dollar and the Pound Sterling on Thursday as markets digested the publication of US President Donald Trump’s world-wide tariff announcement.

At the time of writing, the Pound Euro (GBP/EUR) exchange rate was trading at around €1.18856, 0.65% lower on Thursday's opening levels.

The Euro (EUR) gained strength against several major currencies following US President Donald Trump's announcement of extensive tariffs during the overnight European session on Wednesday.

Despite the Euro's previous vulnerability to the threat of a US-EU trade war, the single currency saw an uptick on Thursday, even after Trump imposed a 20% tariff on EU goods entering the US.

European Commission President Ursula von der Leyen responded by stating that the Eurozone is preparing 'countermeasures.' Additionally, the probability of an interest rate cut by the European Central Bank (ECB) in April increased from 80% to 92%.

Nonetheless, the Euro managed to strengthen on Thursday, largely due to the decline of the US Dollar (USD).

The negative correlation between the two currencies played a significant role, as the 'Greenback' fell sharply following Trump's tariff announcement, fuelling concerns about a potential US recession and thus supporting the Euro.

On Thursday, the Pound (GBP) firmed against most of its major trading partners and continued to gain ground against others following President Trump's tariff announcement.

Earlier in the week, it was revealed that the UK would not be exempt from Trump's tariffs, contrary to initial expectations.
However, the Pound received a boost on Thursday when Trump announced a 10% tariff on UK goods exported to the United States.

Investors in GBP appeared relieved that the UK's tariff rate was lower than those imposed on many other countries, which helped to support the currency.

Additionally, the UK released its final services PMI for March, which, although slightly below forecasts, still indicated growth in the crucial services sector.

GBP/EUR Forecast: Trump Tariffs to Continue to Drive Movement?

Looking ahead to Friday, the primary driver of movement for the Pound Euro exchange rate will likely be the ongoing
reactions to Trump’s sweeping tariffs.

Any additional comments on retaliation could keep markets volatile, potentially leading to headwinds for the GBP/EUR exchange rate.

On the economic data front, Germany is set to release its latest factory orders for February.

These are expected to show a strong rebound, and if the data meets expectations, it could provide support for the Euro as the week draws to a close.

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TAGS: Euro Pound Forecasts Pound Euro Forecasts