Yesterday, the British pound saw a sharp decline against the U.S. dollar, but by the end of the day, it had fully recovered, closing in positive territory. This rebound eased investor concerns after an initial sell-off, highlighting the volatility in currency markets amid ongoing global trade tensions.
Tariffs Take Centre Stage
Tariffs remain the hot topic in global markets. President Trump’s latest move—imposing a 25% tariff on Mexico and Canada—sparked backlash, with both countries threatening to retaliate. This has reignited fears of a potential trade war, which could have far-reaching consequences:
- 🔺 Higher costs for businesses and consumers
- 🔺 Disruptions to global supply chains
- 🔺 A potential slowdown in global trade and economic growth
Temporary Relief, But Uncertainty Remains
In a swift turnaround, Trump struck a deal with Mexico to delay the tariffs for one month, in exchange for stricter border controls. While this provides short-term relief, markets remain on edge over future U.S. trade policies and their potential impact on global economies.
What’s Next for Markets? Key Events to Watch
This week brings several major economic events that could drive currency movements:
📌 Bank of England Rate Decision (Thursday) – With UK economic growth stalling, the BoE is expected to cut interest rates, which could impact the pound’s strength.
📌 US Non-Farm Payrolls (Friday) – A key indicator of U.S. economic strength, this jobs report will influence Federal Reserve policy expectations and the direction of the dollar.
Pound Holds Strong Against the Euro
Despite the uncertainty, by the close of trading on Monday, the pound hit its highest level against the euro since early January. Against the dollar, it recovered fully, trading near last week’s highs, signaling renewed strength in the market.
Navigating Market Volatility
With markets reacting to shifting trade policies and central bank decisions, businesses need to stay informed and prepared. If you’re looking to manage currency risk or capitalise on opportunities, speak to a QuMoney expert today.