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Recently it had looked like trade tensions between China had been easing with some predicting the trade war could even be over the end of this month. Trump however has made threats to the Chinese announcing his intentions on Twitter to more than double current tariffs on $250bn of Chinese goods on Friday.

Currency Pair% Change (Month)Difference on £200,000
GBPUSD2.38%$6,146

Donald Trump Tweeted the following:

The United States has been losing, for many years, 600 to 800 Billion Dollars a year on Trade. With China we lose 500 Billion Dollars. Sorry, we’re not going to be doing that anymore!

This is ahead of Chinese negotiators heading to Washington for talks in an attempt to end the trade war.

This is not good news for the global economy, and if Trump goes through with his threat it could have an impact on the markets. The Chinese would be likely to respond with further increased tariffs on the US. The International Monetary Fund (IMF) have caused concern amongst investors stating this an escalation in the trade war would cause the global economy to weaken.

Will We See a Change in Market Sentiment?

Non-farm Payrolls

Non-farm payroll data was released on Friday and it is renowned for causing volatility on the markets. Non-farm payrolls is a key market indicator, it is a measure of employment minus agriculture. Figures were impressive, 263k jobs were gained in April, 185k above expectations although wages were slightly below expectations.

This had little impact on GBP/USD exchange rates, as positive Brexit developments outweighed the employment release. Despite recent gains for the pound it may remain fragile due to the lack of any firm news on Brexit progression.

CPI data – Friday 10th May

Consumer Price Index (CPI) figures are released on Friday and data could possibly influence monetary policy from the Federal Reserve moving forward. CPI data is a key measure of inflation and considering the somewhat inconsistent interest rate forecast in the US this release has all the more clout.

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