The impact of US president Donald Trump’s tariffs continue to be felt around the world. Stock markets have been in freefall, losing trillions of dollars in value. The pound has lost ground against both the dollar and the euro, down 3% against the EUR, a level not seen since January 2024.
The pound has been particularly hard hit by the turmoil, losing nearly 4 cents against both the dollar and the euro. We are perhaps witnessing an economic event as damaging as the Liz Truss mini budget, except this is a situation the UK government has little control over or ability to reverse.
Although yesterday saw a rally in the markets, with word of possible US trade agreements giving comfort to traders, that reassurance may be short-lived – overnight Trump said the US didn’t need any agreements, saying “I know what the hell I’m doing”.
To protect your budget from all this week has in store, lock in today’s GBP/EUR rate with a call to your account manager on 020 8003 4915.
The tariff drama is far from over because, although they were announced last week, until today, only the 10% baseline tariff on US imports had come into effect. This morning the president’s “reciprocal” tariffs were activated. For Europe, that means an additional 10% levy applied on all its exports to America. For China, who have threatened to respond to Trump’s tariffs with levies of their own, it’s a whopping 104% duty on all its US exports.
However, there’s a glimmer of a silver lining, despite all the turmoil, some UK mortgage lenders are preparing to cut rates on their products.
Earlier this year, the Bank of England signalled its intentions to cut interest rates to stimulate growth in the UK economy. Because of the harm Trump’s tariffs could cause to UK growth, mortgage lenders believe the Bank will continue with its plan, potentially even cutting the interest rate further.
If there’s one thing to take away from the past week, it’s that we’re three months into Donald Trump’s four-year term and the markets are, if anything, becoming harder to predict.
