UK: Weekly FX Market Update 31 March 2025

GBP

• Chancellor Reeves balanced the books last week, with a cut to government spending. However, the Financial Times has reported that her fiscal policy is on a ‘precarious’ footing as the UK tries to navigate a possible global trade war, and a spike in inflation.

• US tariffs are due to be levied this Wednesday. Will the market sell US Dollars if US assets suffer, or will the psychologically important 1.3000 level continue to remain intact?

• How will the long-awaited hike in National Insurance affect the economy?

EUR

• It looks like 25% US tariffs will be levied on EU exports to the US.

• The EU is considering hitting US services exports, including Big Tech’s operations, in retaliation.

• Will investors sell Euros or US Dollars in response to the tariffs. Alternatively, will the tariffs not even be imposed?

USD

• Wednesday April 2^nd is ‘Liberation Day’ for US tariffs, says US President Trump.

• US assets have been soft, as has the US Dollar, as the market prepares for these tariffs.

• With consumer sentiment declining and inflation expectations falling, will the US Dollar suffer as well?

Main events for this week:

Mon Mar 31

07:00 EUR German Preliminary CPI

Tue Apr 1

04:30 AUD Reserve Bank of Australia (RBA) Interest Rate Decision/Statement

05:30 AUD RBA Press conference

10:00 EUR CPI Flash Estimate

10:15 GBP MPC Greene Speaks

15:00 USD ISM Manufacturing PMI

Wed Apr 2

All Day Introduction US Tariffs

Thu Apr 3

13:30 USD Unemployment Claims

15:00 USD ISM Services PMI

Fri Apr 4

13:30 USD Non-Farm Payrolls/Average Hourly Earnings/Unemployment Rate