Better-than-expected UK economic statistics, including a 1.0% increase in retail sales in February, helped to strengthen the pound. Additionally, the GDP growth estimate for 2024 was increased to 1.1%. But in the fourth quarter, the trade gap increased by 70%, from £6 billion to £10.2 billion. In the end, issues over international trade, especially those involving tariffs, are anticipated to affect the movement of the pound in the upcoming weeks, causing markets to remain cautious.
This week, worries over US auto tariffs, particularly their effect on the German economy, could cause volatility in the Euro. In addition, the consumer price index for the Eurozone is anticipated to show a modest decline in inflation in March. This would make a rate decrease by the European Central Bank in April more likely, which would further strain the euro. In the end, the market will pay close attention to how these factors affect the performance of the Euro.
Fears of a recession and trade tariffs are putting pressure on the US dollar. The market is likely to be volatile as President Trump prepares to announce new tariffs. Important economic indicators that could affect the dollar’s movement include Friday’s employment market report and the ISM manufacturing and services PMIs. The dollar might depreciate much more if the report indicates a slowdown in activity or an increase in unemployment.
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