What a difference a week makes. Last Wednesday, I was writing to you about the plummeting pound in face of US president Donald Trump’s ever-increasing, ever-changing tariffs. We looked to be on the precipice of an economic event larger even than Truss and Kwarteng’s mini budget. This week, the pound is approaching highs against the dollar similar to those of September 2024, UK inflation is down, and the likelihood of interest rate cuts is on the rise.
Just another example of why, instead of trying to predict the movements in the market, you should protect yourself against them.
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.
Following Trump’s tariff policy U-turn in the face of a collapse in the US bond market, he has now applied a simpler blanket 10% tariff on all US imports. This is in addition to the tariffs on select industries, such as steel and automobiles, he brought in previously. The one exception is China, who face an eye-watering 145% levy.
That’s not to say the president has fully embraced consistency and clarity – electronics imports face a temporary exemption, and he openly mulls a reprieve for the automotive industry, which has boosted stock prices for European car manufacturers.
The calming of the waters in the US has given way to mixed economic news in the UK.
On Tuesday, HMRC data revealed nearly 80,000 job losses, likely a result of the government’s increases to employer National Insurance contributions. Though the Office for National Statistics also says wages are up by nearly 6% and unemployment remains steady at 4.4%.
Today brought further significant news: inflation has fallen for the third month in the row, contrary to Bank of England predictions at the start of the year. The fall to 2.6% puts fresh pressure on the Monetary Policy Committee to cut interest rates when they meet next on 8 May.
This mixed picture, along with Trump’s inconsistency, and the wild fluctuations we’ve seen in the currency markets since January makes predictions of what will happen next impossible.
