Markets Brace for Trump's Upcoming Reciprocal Tariff Announcement
GBP
GBP/USD is currently trading at 1.2940 (interbank), while GBP/EUR stands at 1.1950 (interbank).
Sterling gained ground last week following a series of stronger-than-expected data releases. February’s retail sales rose by 2.2% year-on-year and 1% month-on-month, outperforming forecasts, while Q4 GDP expanded by 1.5%, above the projected 1.4%, signalling underlying economic resilience. However, a decline in inflation to 2.8% in February tempered some of the optimism.
In her Spring Statement, Chancellor Rachel Reeves forecast a £9.9bn budget surplus over five years but warned of ongoing global headwinds. Concerns have also emerged over reduced welfare support, with millions of families potentially worse off by 2030, despite long-term economic growth forecasts being revised slightly upwards.
This week is expected to be relatively quiet for Sterling, with key attention on PMI releases and the Nationwide House Price Index.
No significant events are scheduled for today.
EUR
EUR/USD is now trading at 1.0827 (interbank), with the pair on track for a quarterly gain of over 4.6% against the U.S. dollar.
The euro has found support following stronger German retail figures, with sales in February rising 0.8% month-on-month, exceeding expectations. Meanwhile, the European Commission is preparing to implement tariffs on €26 billion of U.S. imports this week, including countermeasures on €8 billion worth of American goods due to take effect on Tuesday.
Attention this week will be firmly on the Eurozone’s CPI release and ECB President Christine Lagarde’s speech tomorrow, both of which could shape future policy expectations. Additional commentary from ECB officials is scheduled alongside the release of the HCOB Eurozone PMI for March.
Germany’s preliminary March CPI is expected to show annual inflation holding steady at 2.3%, with a 0.3% increase month-on-month.
Today’s Events (GMT):
13:00 - German CPI (Mar) - 2.3%
USD
The Dollar Index, which measures the U.S. dollar against six major currencies, is 0.8% higher 0.8% at 104.05, recovering from the five-month lows seen earlier last week.
Markets remain jittery ahead of the White House’s anticipated announcement of further reciprocal tariffs on Wednesday, with President Trump hinting that nearly all countries will be affected.
Adding to the tension, U.S. Treasury yields have dropped as investors seek safety, with the 10-year yield falling by over six basis points to 4.19%.
This week will be crucial for the dollar, with a busy economic calendar including JOLTS job openings and ISM manufacturing data on Tuesday, followed by ADP employment, ISM services, and nonfarm payrolls later in the week.
A continued robust labour market could reinforce confidence in the U.S. economy but may also dampen the likelihood of near-term rate cuts by the Federal Reserve.
No significant events are scheduled for today
CAD
USD/CAD is currently trading lower at 1.4393 (interbank) in a cautious session.
The Canadian dollar has been swayed by conflicting pressures, initially gaining before retreating on Friday amid ongoing concerns around potential U.S. trade tariffs.
Canada’s GDP rose by 0.4% in January, sustaining the momentum seen in previous months, partly driven by increased cross-border activity as firms sought to front-run expected tariff costs.
However, investor sentiment is waning as the U.S. deadline of 2 April for its wide-ranging tariff package looms, with little detail provided so far.
Markets are looking ahead to Canada’s employment report later this week for further clarity on the economic outlook.
Oil prices have edged lower, with Brent at $73.52 per barrel and WTI at $68.74 per barrel.
No significant events are scheduled for today
