GBP/USD is now on the defensive, crossing under 1.2950 intraday during this European morning. Market participants remain in a state of flux responding to persistent geopolitical and economic headwinds. This is the UK’s Office for National Statistics (ONS) instead announcing that annual Consumer Price Index (CPI) inflation fell to 2.8% in February. That’s down from 3% in January. All of this data did little to soothe investors, who still focus on the potential tariffs which US President Donald Trump is reportedly set to announce.
The whole financial community is watching, too, the expected reciprocal tariff by President Trump to be announced April 2. Investors are growing skittish from all this indecisiveness. Consequently, the EUR/USD currency pair remains trapped just under 1.0800 for most of Wednesday’s European trading session. The renewed demand for the US Dollar highlights traders' reaction to the latest tariff threats, contributing to the pressure on the EUR/USD pair.
Business and consumer surveys will provide windows into what lies ahead for the US economy. This is especially the case now, as the economy is starting to feel the bite of growing trade tensions. These surveys will be key for judging overall economic sentiment. They’ll guide us in predicting what might happen as the world continues to change.
Hence, the GBP/USD performance comes as a plausible representation of a broader market concern where traders are looking closely at domestic inflationary pressures and international trade policies. Additionally, the ONS announced UK inflation data, indicating a further slowdown in inflation. While helpful, this has not come close to calming market fears over the still-looming second round of US tariff measures.
With an April 2 deadline looming, investors are watching closely for further signs of progress on President Trump’s tariff plans. These measures would greatly alter the landscape of global trade, making US goods significantly more expensive and undermining the relative value of USD globally. We all need to be on our toes in these unpredictable days.