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US tariffs, interest rates & your currency: What you need to know

3 February 2025

Weekly Market Headlines:

  • The US dollar has strengthened against both the pound and the euro following President Trump’s latest tariff announcement.
  • He has hinted that the EU could be next in line for tariffs, raising concerns of a potential trade dispute between the US and Europe.
  • Canada, Mexico, and China have already felt the impact of increased tariffs. While Trump suggested the UK has been ‘out of line,’ he also indicated that discussions with Keir Starmer have been positive so far.
  • The uncertainty surrounding tariffs has put pressure on the euro, causing the pound-to-euro exchange rate to return to levels last seen at the start of the year.

On Thursday, Eurozone retail sales data will be released, followed by the Bank of England’s latest interest rate decision. There’s speculation that the Bank of England could cut interest rates, but with inflation still above target, all eyes will be on the accompanying statement for any clues about future monetary policy. If you’d like to discuss what options you have to protect your budgets against currency movement, contact your dedicated account manager on +44 (0) 204 506 5672 to explore your options.

What’s happening this week?

GBP

  • Thursday: Interest rate decision

EUR

  • Thursday: Eurozone retail sales