The EUR/GBP cross trades in negative territory near 0.8315 during the early European session on Monday. The concerns about the threat of possible US tariffs on the Eurozone undermine the Euro (EUR). Later on Wednesday, investors await the European Central Bank’s (ECB) President Christine Lagarde speech for fresh impetus. 

US President Donald Trump said on Friday that there would be an announcement later in the week about reciprocal tariffs on all countries that tax imports from the US, but he did not specify which countries would be targeted or if there would be any exemptions. Late Sunday, German Chancellor Olaf Scholz stated that the European Union (EU) can act "in an hour" if Trump slaps threatened tariffs on the bloc. Any signs of an escalating trade war between the US and the Eurozone could drag the shared currency lower. 

Additionally, the rising expectation that the ECB will further cut the interest rates contributes to the EUR’s downside. The ECB policymaker, Boris Vujcic, said that anticipation for three more rate reductions this year are reasonable, even though it will take until the start of the second quarter to know with more certainty if they’ll materialize.

The Bank of England (BoE) Governor Andrew Bailey guided a cautious and gradual rate-cut approach, and he warned that inflation could temporarily rise to near 3.7% in the third quarter of the year before falling back to the 2% path due to higher energy prices. 

More By This Author: