Daniel Johnson
Senior Executive Dealer
EU prepare Retaliatory Tariffs
EU to enter trade war with US.
The EU are to target a list of US goods worth $3.24bn when tariffs are to be put in place later today. This has the potential to impact exports to the US and as such the strength of the Euro in the longer term. The table below shows the difference in Euros you could have achieved when buying £200,000.00 during the high and low points during trading yesterday.
| Currency Pair | % Change | Difference on £200,000 |
|---|---|---|
| GBP/EUR | 0.79% | €1800 |
The tariffs are set to be put in place in retaliation to the US’s tariffs on steel and aluminium. The EU has been hit by tariffs of 10% on aluminium and 25% on steel.
EU Trade Commissioner Cecilia Malmstrom stated;
“We do not wish to be in this position. However, the unilateral and unjustified decision of the United States to impose steel and aluminium tariffs on the EU means that we are left with no other choice.”
The tariffs will be put in place on a wide range of products including whisky, rice, motorbikes, oranges juice and various steel products.
The tariffs have been formally accepted by the commission and will come into place today.
The implications of the tariffs could result a drop in Euro value and the trade war could be ongoing. European Central Bank (ECB) President, Mario Draghi last week decided to cut Quantitative Easing (QE) and it is set to be completed by the end of the year which should have been very positive for the Euro. However he cited global economic uncertainty as a serious concern and stated there is unlikely to be any positive changes to interest rate levels until late 2019 which caused Sterling to strengthen.
Something to take note for Sterling sellers purchasing the Euro is that despite this very pessimistic monetary policy outlook GBP/EUR still failed to break through 1.15, which proves that the Pound still remains fragile.
Manufacturing & Services PMI released later today
Purchase managers Index captures the business conditions in a specific sector. There is expected to be a slight fall in both services and manufacturing, but if the results come in worse than expectations it may create opportunity for Euro buyers.
For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here.
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