April 7, 2025 – Written by Ben Hughes
STORY LINK Pound Euro Exchange Rate Soft Amid Stocks Screens “Sea of Red”, EUR/USD Consolidates
TARIFF TRADE UPDATE: The Pound to Euro rate slipped on Monday amid a cautious market mood and the publication of the Eurozone’s latest retail sales data.
At the time of writing, the GBP/EUR was trading at around €1.1718, down roughly 0.4% from Monday’s opening levels.
On Monday, the Euro (EUR) saw a significant rise against most of its trading partners following the release of the Eurozone’s latest retail sales index.
The data for February showed a positive rebound, increasing from 0% to 0.3%. Although this figure fell short of the market’s expectation of a 0.5% increase, the Euro still performed strongly.
The currency’s strength was further supported by the day’s heightened market anxiety and its reputation as a safe-haven asset.
As investors grappled with the ongoing implications of US President Donald Trump’s global tariffs, the Euro benefited from a flight to safety, boosting its exchange rates despite the slightly disappointing retail sales figures.
On Monday, the Pound (GBP) experienced significant fluctuations despite a lack of new economic data from the UK.
The currency’s movement was also largely influenced by the day’s market sentiment, highlighting its increasing sensitivity to risk.
As such, Sterling gained strength against more volatile currencies but lost ground against safe-haven assets, reflecting the cautious trading atmosphere and the lack of major economic updates from the UK.
Looking ahead to Tuesday, the main factor influencing the Pound Euro exchange rate will likely be the upcoming speeches from European Central Bank (ECB) members.
Given that money markets on Monday priced in a more than 90% chance of another interest rate cut by the ECB at next week’s meeting, any additional dovish comments could cause the Euro to weaken further.
For the Pound, there are no UK economic data releases scheduled for Tuesday, so Sterling is expected to continue trading based on the market’s risk sentiment.
“Stocks screens are a sea of red as investors register deepening concerns over the impact of US tariffs on the global economy” says Shaun Osborne, Chief FX Strategist at Scotiabank.
“Are countries rushing to offer the US concessions on trade? So far, it seems only Vietnam and Cambodia have started talks to lift levies.
“More ominously, China has retaliated and the Eurozone is set to do likewise this week.
“The president dismissed market volatility over the weekend, as did Treasury Sec. Bessent, suggesting the slide in stocks will not sway policy. But market losses are significant.
“The S&P 500 lost 9% over Thursday and Friday and futures are down 2.5% this morning; the index is nearing “bear market” territory.
“Recession risks are rising—Wall St banks are upping their recession probability estimates—and stocks may have further to fall to fully price in that eventuality.”
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