GBP/USD Sinks Amid Renewed Trump's Tariff Fears
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Sterling stabilised against the US Dollar, trading near 1.2623, as market sentiment turned cautious due to US President Trump's tariff agenda. During a joint press conference with French President Emmanuel Macron, Trump commented, "The tariffs are going forward on time, on schedule," fuelling fears of a global trade war. Additionally, disappointing US economic data, including Jobless Claims and the S&P Global Purchasing Managers' Index (PMI), weighed on the greenback. S&P Global's Composite PMI dropped to 50.4 in February, down from 52.7. Conversely, the Manufacturing PMI rose from 51.2 in January to 51.6 in February, exceeding the forecast of 51.5. Meanwhile, the Services PMI declined from 52.9 in January to 49.7 in February, falling short of the anticipated 53.0. The University of Michigan Consumer Sentiment Index decreased to 64.7, below the expected 67.8 and the prior reading. Additionally, 5-year Consumer Inflation Expectations increased to 3.5%, surpassing the consensus of 3.3% and the previous figure.
EUR/CAD Rebounds Despite Tariff Concerns
EUR/CAD recovered to near 1.4925, as an escalation in crude oil prices undermined the commodity-linked Loonie. The recent hotter-than-expected CPI report reinforced speculation that the Bank of Canada (BoC) will reduce the policy rate again at its next monetary policy meeting on March 12, adding pressure to the currency. The Consumer Price Index (CPI), which measures the cost of everyday goods and services, increased by 1.9% from December's 1.8%, which aligns with forecasts by analysts. On a month-to-month basis, prices went up by 0.1%, bouncing back from a 0.4% decrease in December. In contrast, the Bank of Canada's Core CPI, which omits fluctuating categories like food and energy, showcased more strength. It rose to 2.1% year-over-year in January 2025, compared to 1.8% the month before, and noted a monthly increase of 0.4%, reversing a 0.3% drop in December.
GBP/JPY Sinks on Tumbling JGB Yields
GBP/JPY hovers near 188.80, following the abrupt decline in Japanese government bond (JGB) yields and the release of Japan's Services Producer Price Index (PPI). The SPPI figures rose 3.1% YoY in January, up from the previous 3.0% and aligning with the market anticipation, fuelling bets that the Bank of Japan (BoJ) will hike interest rates further. Friday's hotter-than-expected Japan's National Consumer Price Index (CPI) inflation data showed an increase of 4.0% year-on-year (YoY) in January, a growth from the previous 3.6%, as the Japan Statistics Bureau reported. However, US President Trump is attempting to provoke a global trade war with threats of high tariffs on Canada and Mexico, warning that these tariffs are still anticipated to take effect "next month," which could steer market volatility by adding safe-haven flows for the yen.
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