Tariffs increase USD demand.

Key Headline:

25% tariffs on steel and aluminum announced

EUR, CAD, and MXN facing pressure

Recap

 Tump in headlines: Reports suggest he plans to impose reciprocal tariffs, though target countries remain unspecified.

 Market reaction: Treasury yields rose on inflation concerns, lowering the likelihood of a second Fed rate cut this year. The USD strengthened across the board.

 US jobs data: Job additions fell short (143K vs. 175K expected), but prior revisions added 100K jobs. Unemployment dipped to 4% from 4.1%.

 ECB outlook: Economists estimate the neutral interest rate between 1.75% - 2.25%, aligning with market expectations of 1.75% by year-end.

Today’s Rates

Today's Interbank Rates at 11:55 am against GBP movement.

GBP>EUR – 1.2010

GBP>USD – 1.2400

EUR>GBP – 0.8326

EUR>USD – 1.0325

GBP>CAD – 1.7780

GBP>AUD – 1.9756

GBP>SEK – 13.527

GBP>CHF – 1.1283

GBP>PLN – 5.0227

GBP>AED – 4.5534

GBP>HKD – 9.6508

GBP>ZAR – 22.830

Today’s Key Takeaways

USD Strengthens: Supported by Trump’s announcement of 25% tariffs on steel and aluminum, potentially impacting Canada, Mexico, China, Brazil, South Korea, and Germany. CAD, MXN, and EUR are under pressure.

EUR Outlook: May gain support if the proposed Russia-Ukraine ceasefire takes shape.

Key Data Releases:

Wednesday: January CPI & PPI to gauge US inflation. Headline and core CPI (YoY) expected to remain unchanged. Retail sales anticipated to show a slowdown from December.

Thursday: UK GDP report expected to confirm a 0.1% contraction in Q4 following the Bank of England's GDP downgrade for the year

6th February 2025

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