The EUR/GBP exchange rate is exhibiting upward movement, driven by renewed optimism regarding the potential reduction of global trade tensions following statements from US President Donald Trump indicating a willingness to engage in negotiations with international partners. This sentiment is further supported by US Treasury Secretary Scott Bessent’s disclosure of communication from approximately 70 countries regarding tariff discussions.
Despite this positive outlook, the European Commission is proceeding with preparations for retaliatory tariffs of up to 25% on approximately €22.1 billion worth of US exports. European Commission President Ursula von der Leyen has proposed a negotiated resolution to address the disruptive impact of US tariffs during discussions with Chinese Premier Li Qiang.
Concurrently, dovish expectations surrounding the European Central Bank (ECB) are exerting downward pressure on the Euro. Several policymakers, including Piero Cipollone, François Villeroy de Galhau, and Yannis Stournaras, have expressed support for further monetary easing. Stournaras, ahead of the Eurozone finance ministers’ meeting in Warsaw, asserted that prospective tariffs would not impede an anticipated rate cut in April, while estimating a potential 0.3%-0.4% reduction in Eurozone GDP during the initial year.
