By Simon Eastman
Thursday saw the euro weaken across the board as US President Donald Trump threatened 200 percent tariffs on European wine and food, in retaliation to the EU announcing $48 billion worth of tariffs on US imports, after Trump first imposed $46 billion on the EU.
Over the last 48 hours, since the EU responded to Trump’s initial levies, the euro has lost a cent against the pound and nearly the same against the US dollar as the over-sold single currency retracts from the position it saw itself in this time last week, when the German government announced additional spending to support the economy.
The movement yesterday was despite EU industrial production readings beating expectations and the US jobless claims and produce prices index coming out lower than forecast.
Today we see a strong end to the week data-wise, with German inflation readings out early doors, followed closely by UK GDP. UK industrial and manufacturing production plus trade balance figures will also have been released by the time we go to print.
As the trading day kicks off, UK consumer inflation expectations are released at 9.30am. Come lunchtime, ECB member Cipollone makes a keynote speech ahead of the last data release of the week at 2pm, when the Michigan consumer sentiment index and 5-year consumer inflation expectations reading comes out.
Given the movement over the past 48 hours has been completely politically driven, we must watch closely to see if the EU make a response to the latest 200 percent tariff imposed by Trump on wine and food imports for Europe. Will there be a response at all and will a response, or not, work in favour of those buying or selling euros?
Keep in touch with the team at A Place In The Sun Currency for all the updates and some friendly guidance on your upcoming requirements.