The EUR/USD currency pair continued its upward path in the European morning session on Monday, climbing towards the 1.0850 mark. This is even after a three-day decline, with support on weekly timeframes potentially hinting at more upside. At the same time, the GBP/USD pocketed its own bit of recovery, holding on to daily gains above 1.2950 in that Asian session. Both currency pairs showed considerable strength despite mixed economic data and news.
Economic Indicators Influence Market Sentiment
Take the latest economic statistics from the UK, which point to an unexpected boom in private sector business activity during March. This far better than February, supports Pound Sterling. This surge in economic activity helped prop up market sentiment, offsetting otherwise poor mixed signals as seen across a variety of traditional economic indicators. The outlook in the manufacturing sector saw the biggest jump, climbing from 45.8 to 48.9. It is currently just down from the important 50 threshold, which indicates expansion.
The upbeat German and EU PMI data failed to stop the EUR/USD slide. It remained robust, supported by an improved risk appetite as concerns over US reciprocal tariffs started to recede from memory. This development was further supported by news that the Trump administration plans to reduce the breadth of tariffs previously scheduled for April 2. Investors applauded this action, with it pumping a sense of optimism into markets around the world.
Tariff Easing Brings Relief to Markets
When the Trump administration announced that they would ease some tariffs, relief rushed through financial markets. This reversal in US trade policy played an important role in reducing some of the risk aversion that had been depressing investor sentiment. The resolution of worries over tariffs increased optimism in the market. This resilience was most apparent in the EUR/USD and GBP/USD currency pairs.
Additionally, possible regulatory shifting in US legislation may bring more support and optimism to market participants. This possible shot in the arm comes true economic uncertainty continues to permeate the market with conflicting signals. Traders and investors alike are reeling from this topsy turvy, unpredictable world.
Outlook for EUR/USD and GBP/USD
All the overly bearish market sentiment from earlier sessions became worrisome. Recent events have suddenly created a better chance for positive news on both the EUR/USD and GBP/USD currency pairs. Recovery EUR/USD pair looks good momentum and continues to gain daily. Against the backdrop of such mixed fundamental data, this trend has perplexingly underscored the Euro’s underlying strength. Meanwhile, the GBP/USD pair's resilience is bolstered by improving business activity in the UK's private sector.
This general market sentiment will likely be supported by continued easing of tariff concerns and favorable economic news. Even employment in manufacturing is approaching expansion territory. At the same time, private sector activity is strengthening which would help improve the trading environment for both currency pairs.