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pound reaches five month high as us tariffs impact currency markets

The British pound has surged to a five-month high of $1.31 following President Trump's unexpected tariffs on major trading partners, which are anticipated to impact US growth and provoke a dovish response from the Federal Reserve. Market expectations now suggest a potential cut of around 62 basis points in the Bank of England's key rate by December. The GBP/USD is on an upward trend, with the possibility of reaching last year's high of $1.34, as favorable conditions for European currencies emerge.

sterling may outperform euro amid potential trade deal negotiations with us

The UK's goods exports to the US account for just under 2% of GDP, compared to 3% for the eurozone, with potential trade deals favoring British exports amid ongoing negotiations. Analysts foresee downside risks for EUR/GBP in the near term, possibly dropping below 0.830, while a longer-term rebound may occur as Bank of England rate expectations adjust.

UK regulator proposes increase in bank deposit protection limit to 110000 pounds

Britain's Prudential Regulation Authority has proposed increasing the deposit protection limit for savers from £85,000 to £110,000 in the event of a bank failure. This change aims to enhance financial security for consumers, reflecting the evolving economic landscape. The current limit has been in place since 2017.

fears over fed backstop could undermine dollar's reserve currency status

Deutsche Bank warns that the Federal Reserve's potential withdrawal of its liquidity backstop could jeopardize the dollar's status as a reserve currency, marking the most significant risk since World War II. Concerns about the reliability of Fed swap lines may prompt global de-dollarization, especially among Western allies, as countries like China and Russia continue to reduce their reliance on the US financial system. The Fed's role as the world's lender of last resort is crucial, and any hesitation to provide liquidity could lead to increased demand for dollars and destabilize US asset markets.

fed backstop concerns could jeopardize dollar's reserve currency status

Deutsche Bank warns that the Federal Reserve's potential withdrawal of its liquidity backstop could jeopardize the dollar's status as a reserve currency, marking a significant risk since World War II. Informal discussions among European officials suggest concerns over the reliability of Fed swap lines, which allow global institutions to borrow dollars during financial stress. Such fears could drive a shift towards de-dollarisation among America's Western allies, especially if the Trump administration influences the Fed's actions.

canadian prime minister carney faces election amid trade tensions with trump

Mark Carney, newly sworn in as Canada’s 24th prime minister, will run for a seat in Nepean as the Liberal Party faces a challenging election amid a trade war with the U.S. and rising Canadian nationalism. His main opponent, Conservative leader Pierre Poilievre, aims to capitalize on discontent with the previous administration. The election, set for April 28, will determine control of the House of Commons and the future direction of Canadian politics.

canadian election campaign intensifies amid trade tensions with united states

Mark Carney, newly sworn in as Canada’s 24th prime minister, will run for a seat in Nepean as he triggers an early election amid a trade war with the U.S. and rising Canadian nationalism. His main challenger, Conservative leader Pierre Poilievre, faces a shifting political landscape influenced by U.S. President Trump's threats. The election, set for April 28, will determine control of the House of Commons and the future direction of Canadian politics.

bank of england holds rates amid economic uncertainty and inflation concerns

The Bank of England's recent hold on interest rates led to a slight hawkish repricing in the sterling curve, with only one member opposing the decision. Despite expectations of three rate cuts this year, data uncertainty looms due to upcoming corporate tax hikes and US tariffs, raising concerns about growth and inflation. The outlook for GBP remains cautious, with a preference for trading GBP weakness through Cable rather than EUR/GBP.

deutsche bank forecasts rising uk inflation expectations through 2025

U.K. inflation expectations are rising, with Deutsche Bank forecasting they will remain elevated through 2025, driven by increases in food and energy prices. The Bank of England's data shows short-term expectations at 3.9%, prompting concerns about second-round effects on the economy. While rate cuts are anticipated, the MPC may pause if inflation continues to climb, particularly as it assesses 2026 pay settlements.

global trade faces uncertainty as tariffs impact job markets and prices

South Korea's early March export data showed recovery from lunar new year distortions, driven by ships and chips, though consumer sectors lagged. In the US, job losses linked to trade taxes are reported, raising concerns about potential economic impacts if unemployment fears grow. Meanwhile, Japan's February consumer price data indicated slower inflation, and the Bank of England's Governor highlighted economic uncertainty, with the ONS suspending producer price data due to reliability issues.
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