Market pressure on the Euro has continued over the last 48 hours as Trump looks increasingly set to implement an America First policy around trade tariffs, which is set to sting Europe particularly hard given that they are one of America’s largest trading partners. Trump has already stated he intends to introduce a 10% import tariff to bolster The U.S Manufacturing base and is one reason why we’ve seen the EUR/USD rate continue to slide.
Alongside this, the collapse within The German government has also provided extra downside on The Euro, with political uncertainty leading to the collapse of the coalition government and an increasing possibility of a snap election being called in March 2025.
Moving into this afternoon, we have US Inflation figures set to be released. Economists expect October’s number to come in slightly higher than September’s number with an increase of 0.2%. An increase in inflation would stoke the flames even further for The Federal Reserve to keep rates higher for longer. Prior to Trumps Election victory, markets were expecting back-to-back rate cuts in November & December, but after Trumps’ victory and his inflationary measures mentioned previously, there seems to be sentiment for a pause on rate cutting and today’s inflation release could support this further.
In respect to market movement, a strong inflation reading for The US will no doubt lead to further losses for both GBP & EUR against The Dollar.
GBP/EUR 1.1989 GBP/USD 1.2744 GBP/AED 4.6815
GBP/AUD 1.9509 GBP/CHF 1.1246 GBP/CAD 1.7778
GBP/NZD 2.1487 EUR/USD 1.0617 GBP/ZAR 22.8969