- The EUR/GBP advances as the Euro gains support in the midst of growing fears of a possible recession in the US.
- The ECB also warned that tariffs imposed by the US could severely impact economic growth, increasing expectations of greater monetary relaxation.
- The Prime Minister of the United Kingdom, Keir Starmer, is working to ensure a commercial agreement with the USA after the announcement of new tariffs by Trump.
The EUR/GBP extends its profits per second consecutive session, quoting around 0.8600 during Monday’s Asian hours. The crossroads is strengthened as the euro (EUR) advances in front of its counterparts, supported by the persistent weakness of the US dollar (USD) in the midst of growing concerns about a possible recession in the US and questions about the independence of the Federal Reserve (Fed).
However, the euro faced challenges after the European Central Bank (ECB) cut the interest rates for the seventh time in a year last week. The ECB also warned that economic growth could be significantly impacted by US tariffs, reinforcing the expectations of a greater relaxation of politics in the coming months.
In addition, the head of the ECB policy, Madis Müller, said that the fall in energy prices and the impact of tariffs supported the recent rate cut. Müller emphasized that monetary policy no longer acts as a restriction and stressed that the key indicators are in the right direction. However, he also warned that the increase in economic fragmentation could lead to upward pressures on prices.
The bullish potential of the EUR/GBP crossing could be limited as the pound sterling (GBP) is also strengthened, driven by optimism about business conversations in progress between the US and the United Kingdom. The Prime Minister of the United Kingdom, Keir Starmer, seeks to ensure an agreement with the US after the announcement of President Trump of 10% tariffs on the products of the United Kingdom and a 25% tax on the imports of cars, steel and aluminum.
The Prime Minister of the United Kingdom, Keir Starmer, and the president of the United States, Donald Trump, held their first conversation on Friday since the imposition of tariffs on the United Kingdom products, describing commercial conversations such as “in progress and productive.” According to a Downing Street official, Starmer reaffirmed his commitment to “free and open trade” while stressing the importance of safeguarding national interest.
FAQS tariffs
Although tariffs and taxes generate government income to finance public goods and services, they have several distinctions. Tariffs are paid in advance in the entrance port, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and companies, while tariffs are paid by importers.
There are two schools of thought among economists regarding the use of tariffs. While some argue that tariffs are necessary to protect national industries and address commercial imbalances, others see them as a harmful tool that could potentially increase long -term prices and bring to a harmful commercial war by promoting reciprocal tariffs.
During the election campaign for the presidential elections of November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy. In 2024, Mexico, China and Canada represented 42% of the total US imports in this period, Mexico stood out as the main exporter with 466.6 billion dollars, according to the US Census Office, therefore, Trump wants to focus on these three nations by imposing tariffs. It also plans to use the income generated through tariffs to reduce personal income taxes.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
