Despite an initial attempt to regain previous losses, the Euro (EUR) continues to face conflicting factors in its relationship with the British Pound (GBP) on Monday. The recent announcement from United States (US) President Donald Trump to postpone tariffs on EU imports until July 9 provided some support for the Euro, but it remains unable to surpass the 0.8400 level. In contrast, the British Pound continues to benefit from strong economic data and steady inflation expectations.
The delay in tariffs comes after Trump’s initial proposal for a 50% tariff on all EU goods. This extension was confirmed after a call between Trump and European Commission President Ursula von der Leyen, who stated that the EU is ready to swiftly and decisively advance talks. Furthermore, European Central Bank (ECB) President Christine Lagarde’s comments also helped to limit the Euro’s losses as she emphasized the importance of strengthening the currency’s global role in the face of increasing geopolitical and economic uncertainties.
However, despite these events, the Euro was unable to surpass the 0.8400 mark against the British Pound on Monday. The Pound, on the other hand, continues to receive support from strong domestic data and stable inflation expectations. On Tuesday, the Eurozone will release important sentiment indicators for May, which will provide insight into the economic conditions as perceived by businesses and consumers across the region. For the EUR/GBP pair, this data could be crucial in determining the Euro’s future strength against the Pound.
If the sentiment readings are stronger than expected, it could reinforce confidence in the Eurozone’s resilience and potentially delay further rate cuts by the ECB, thus boosting the single currency. However, if the sentiment figures are weaker than expected, it may weigh on the Euro, especially if ECB policymakers such as Klaas Knot and Joachim Nagel adopt a dovish tone in their speeches later in the day. In such a scenario, the bears may regain control of EUR/GBP, particularly if UK fundamentals remain strong and continue to support the Pound.