Euro Steadies, Dollar Weak on Tariff and Growth Concerns
GBP
GBP/USD is currently trading at 1.2919 (interbank), while GBP/EUR stands at 1.1900 (interbank).
Sterling strengthened last week, largely due to U.S. dollar weakness following President Donald Trump’s trade tariff announcements.
The focus was also on the Bank of England’s monetary policy, with Andrew Bailey, Huw Pill, and Catherine Mann all delivering speeches. While most Monetary Policy Committee (MPC) members support a “gradual” and “cautious” approach to rate cuts, Mann remains in favour of a more aggressive stance. Speaking in New Zealand, she argued that the initial rationale for gradual rate reductions—avoiding sharp moves in bond markets—is now outdated due to volatility caused by policy uncertainty in the U.S. and EU.
The BoE is expected to maintain rates in its next meeting on 20th March, with markets still pricing in a total of 50 basis points in rate cuts by the end of the year.
This week, Sterling traders will keep an eye on UK retail sales figures tomorrow and GDP data on Friday for further economic insights.
No significant events are scheduled for today.
EUR
EUR/USD is currently trading at 1.0861 (interbank) after gaining over 4% last week, marking its biggest weekly movement of the year.
This morning, German industrial production for January rose by 2.0%, exceeding expectations, but was overshadowed by a sharp decline in exports, highlighting the ongoing challenges for the Eurozone’s largest economy.
The euro received a boost last week following the German government’s agreement on a fiscal stimulus package and a shift in investor sentiment, with capital moving into European equities as they seek alternatives to expensive U.S. stocks.
As widely anticipated, the European Central Bank (ECB) cut interest rates by 25 basis points last week, maintaining its stance of data-driven, meeting-by-meeting policy adjustments.
There are no major economic releases this week except for Thursday’s industrial production data, which is expected to rebound to 0.6% from -1.1% in the previous month. Investors will also be monitoring comments from ECB officials, looking for further guidance following last week’s euro repricing.
On the geopolitical front, negotiations in Saudi Arabia continue regarding a potential partial ceasefire in Ukraine after the U.S. scaled back intelligence and military support.
Today’s Events (GMT):
07:00 - German Industrial Production (Jan) – Actual: 2.0% vs Forecast: 1.6%
USD
The Dollar Index, which measures the U.S. dollar against a basket of six major currencies, is currently at 103.75, hovering near its lowest level since late October.
The greenback is attempting a slight recovery, trading 0.1% higher at 103.959, after its worst weekly decline since November 2022, where it fell more than 3% against major peers.
Uncertainty surrounding U.S. President Donald Trump’s trade policies continues to weigh on the dollar, with markets concerned over the economic implications of the tariffs imposed on Mexico, Canada, and China.
Over the weekend, Trump declined to comment on whether his trade policies could push the U.S. economy into recession, adding further unease among investors.
This week, the focus will be Wednesday’s Consumer Price Index (CPI) release, which could offer further clues about future Federal Reserve policy decisions.
No significant events are scheduled for today.
CAD
USD/CAD is currently trading at 1.4382 (interbank), with the Canadian dollar finding some support from trade data but remaining vulnerable to ongoing tariff concerns.
The Canadian dollar remains under pressure after weak domestic employment data last Friday, with Statistics Canada reporting a net gain of just 1,100 jobs in February—significantly below the previous month’s 76,000.
The disappointing labour market figures suggest that businesses may already be adjusting to trade war uncertainty, as Canadian exports face new risks from U.S. tariffs.
Meanwhile, Mark Carney, who is set to take office as Canada’s Prime Minister in the coming days, used his victory speech to criticise Trump’s trade policies, vowing to fight back and protect Canadian industries.
On the economic front, attention turns to Wednesday’s BoC rate decision, where another 25-basis-point cut is widely expected. This would bring the policy rate to 2.75%, aligning it with the central bank’s estimated “neutral” level—neither stimulating nor restricting economic growth.
Oil prices remain stable, with Brent crude at $70.40 per barrel and West Texas Intermediate (WTI) at $67.08 per barrel.
No significant events are scheduled for today.
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