Pound to Euro Rate Slides to 1.156 on Latest China Tariff Retaliation

April 9, 2025 - Written by Frank Davies

STORY LINK Pound to Euro Rate Slides to 1.156 on Latest China Tariff Retaliation

Risk appetite dived again ahead of Wednesday’s open with China announcing another round of retaliation against the US as the US-China trade war escalated.

Fears surrounding US capital markets have increased, although the S&P 500 index managed to turn positive in early trading which provided some relief.

Overall sentiment will, however, remain extremely fragile with comments from the Administration, Congressional figures and central bank officials all watched very closely.

If bond yields continue to increase, recession fears will intensify.

The Euro held firm on defensive demand while the Pound has posted further losses amid underlying vulnerability due to the current account deficit.

George Vessey, lead forex and macro strategist at Convera commented; "With global investor sentiment so weak and volatility so elevated, it was only a matter of time before investors ditched the UK currency in favour of safer alternatives with current account surpluses."

The Pound to Euro (GBP/EUR) exchange rate slumped further to 15-month lows near 1.1550.


With the dollar also vulnerable, the Pound to Dollar (GBP/USD) exchange rate held above 1-month lows near 1.2700 and traded around 1.2780.

After the US imposed a further tariff increase of 50% on US goods, which took the total on some goods to 104%, China retaliated in fashion with an increase of 50% in tariffs on US exports.

Scotiabank commented; “Tariffs and their anticipated consequences are driving investors out of US assets, either as a consequence of liquidating winning positions to offset losses elsewhere or as a result of concerns that the primacy of US asset markets is eroding amid poor policy decisions.”

It added; “Market moves may raise concerns that markets are facing some serious dislocations as investors redeploy capital away from US assets.”

There has been further very volatile trading in Treasuries following sharp losses recorded over the past 24 hours.

Jan Nevruzi, U.S. rates strategist at TD Securities commented; "The big moves in the market across asset classes triggered the unwind."

There has been speculation that China has been selling Treasuries and reports that arbitrage traders using so-called basis trades have been forced to close positions which triggered stop-loss selling.


Nevruzi added; "When you have big moves like that and you're relying on some arbitrage relationship, spreads tightening for whatever reason, you might have to trim your positions."

Andrew Brenner, head of international fixed income at National Alliance Capital Markets commented; "We have been banging the tables for years that the depth of liquidity in the Treasury market is poor and has been for years."

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Pound Euro Forecasts