Pound Falls Against Euro as U.S. Tariff Ruling Boosts Euro and Dollar
www.globanow.com
The Pound to Euro exchange rate slipped after U.S. President Donald Trump secured a temporary reprieve for his contested tariffs.
The Euro gained against both the Dollar and the British Pound after the U.S. Court of Appeals for the Federal Circuit temporarily reinstated Trump’s “Liberation Day” tariffs. These tariffs had been blocked just a day earlier by the U.S. Court of International Trade (CIT).
The CIT had ruled that former President Trump overstepped his authority by implementing broad tariffs under the International Emergency Economic Powers Act (IEEPA), determining that the economic risks cited did not constitute the “unusual and extraordinary threat” required by the statute—rendering the tariffs unlawful.
News of the appeals court’s decision revived hopes that the economic fallout from tariffs might be contained, which in turn supported the Dollar and lifted equity markets. Meanwhile, the Pound, which often strengthens alongside market optimism, lost ground against the Euro. However, it did manage to climb to a multi-week high of 1.1965.
Euro Rebounds as U.S. Appeals Court Reinstates Tariffs, Weighing on Pound and Dollar
The Euro regained ground against most G10 currencies, including the Pound Sterling and U.S. Dollar, after the U.S. Court of Appeals granted an emergency motion from the Trump administration. The motion argued that halting the tariffs was “critical for the country’s national security.”
“There was a brief glimmer of hope that U.S. courts might overturn the government’s tariff policy. The resulting recovery of the U.S. Dollar was short-lived. After an appeals court blocked the injunction, the Dollar took a significant hit,” said Ulrich Leuchtmann, Head of FX and Commodity Research at Commerzbank.
The Euro is often favored over the Dollar during periods of trade uncertainty and tends to outperform other major currencies, including the Pound, under such conditions.
The EUR/USD pair rose from an intraday low of 1.1210 to close at 1.1365, lifting the EUR/GBP rate to 0.8431. As a result, the GBP/EUR exchange rate fell back to 1.1861, down from a multi-week high of 1.1965 reached the previous day.
Tariff Ruling Halts Pound’s Momentum Against Euro
The recent U.S. appeals court decision in favor of reinstating tariffs has disrupted the Pound to Euro (GBP/EUR) exchange rate’s upward trajectory, which had appeared poised to reach the 1.20 level in the near term.
This development marks a setback in what had been a steady bullish trend. While the outlook had pointed toward further gains for Sterling, the inherently volatile nature of foreign exchange markets meant a correction was always a possibility.
Now, attention turns to a potential consolidation phase. Analysts expect the GBP/EUR to stabilize within a range defined by the 50-day moving average at 1.1842 and the nine-day moving average at 1.1885.
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🔍 Foreign Exchange Market Consultation
1. Market Overview
Recent volatility in the Pound Sterling (GBP) and Euro (EUR) has been driven by developments in U.S. trade policy. A U.S. Court of Appeals ruling to temporarily reinstate tariffs initiated under former President Donald Trump has triggered a risk-off response in currency markets.
- Pound Sterling (GBP): Dropped sharply against the Euro after optimism around U.S. court intervention on tariffs faded.
- Euro (EUR): Gained broadly across the G10 space as a preferred alternative to the Dollar during trade-related uncertainties.
- U.S. Dollar (USD): Saw a temporary recovery which quickly reversed after the reinstatement of tariffs was deemed a risk to global trade stability.
2. Key Exchange Rate Movements
| Currency Pair | Recent High | Recent Low | Current Level (approx.) |
|---|---|---|---|
| GBP/EUR | 1.1965 | 1.1861 | 1.1865 |
| EUR/USD | 1.1210 | 1.1365 | 1.1355 |
| GBP/USD | 1.3470 | 1.3302 | 1.3325 |
3. Technical Outlook: GBP/EUR
- Uptrend Interrupted: GBP/EUR had been on track to reach 1.20 but faced resistance amid renewed global uncertainty.
- Short-Term Range: Expected consolidation between the 50-day moving average (1.1842) and 9-day moving average (1.1885).
- Support/Resistance:
- Support: 1.1840 / 1.1800
- Resistance: 1.1885 / 1.1965
4. Strategic Considerations
❗ Key Risks:
- Trade tension escalation due to U.S. tariff policies.
- UK macroeconomic vulnerabilities (debt, inflation).
- Eurozone resilience in times of global market stress.
📈 Potential Opportunities:
- Use pullbacks to accumulate EUR if risk sentiment deteriorates.
- Consider hedging short-term GBP exposure around key technical support levels.
5. Recommendations
| Strategy | Currency Focus | Time Frame | Notes |
|---|---|---|---|
| Hedge GBP Exposure | GBP/EUR | Short-Term | Protect against downside to 1.1800 |
| Accumulate EUR Positions | EUR/USD | Medium-Term | Favorable under persistent trade anxiety |
| Monitor Tariff Developments | All FX pairs | Ongoing | Policy changes remain unpredictable |
6. Next Steps
- Review exposure to GBP-linked assets and adjust hedging levels accordingly.
- Set alerts for key technical levels (1.1840 & 1.1965 for GBP/EUR).
- Schedule a follow-up review in one week or post next tariff-related court ruling.
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