Daily Analysis: Mixed Signals on US Trade Talks as Traders Bet on BoE & ECB Rate Cuts

Our daily analysis of EUR, GBP and USD.

DAILY ANALYSIS

USD

• Uncertainty continues to loom with mixed messaging over the progression of trade talks with China.
  • U.S. officials, including Agriculture Secretary Brooke Rollins and President Trump, claim ongoing trade talks with China and progress in negotiations, though Beijing denies it.
  • Treasury Secretary Scott Bessent confirmed recent contact with China, stressing that Beijing must lead efforts to ease tariff tensions due to the trade imbalance between the two nations.
• Job openings for March will be released at 14:00 GMT, with vacancies expected to drop to 7.5 million from 7.568 million in February.
• EUR/USD steadies around 1.14 levels as expectations grow for additional rate cuts by the European Central Bank in June.

EUR

• German consumer sentiment hit an 8-month high, driven by rising income and economic expectations, reduced savings, and optimism despite global trade uncertainties.
  • Consumer expert Rolf Bürkl noted that rising U.S. tariffs may be offset by political stability from concluded coalition talks and the expected formation of a new German government.
• Spain’s Q1 2025 GDP grew 0.6%, the slowest in seven quarters, with annual growth easing to 2.8%. April’s Harmonised Index of Consumer Prices also dipped slightly to 0.6% from 0.7%.
• ECB Executive Board member Piero Cipollone warned that trade policy uncertainty may dampen business investment.
• Eurozone Consumer Confidence is expected to remain steady at -16.7 later today, whilst Economic Sentiment is forecasted to shrink from 95.2 to 94.5.

GBP

• The dented sentiment towards the Greenback continues to benefit the Pound. GBP/USD is up 0.67% weekly and 3.88% monthly.
• Traders are pricing in a 25bps cut to 4.25% from the BoE in the May meeting.
  • Any dovish comments from Dave Ramsden later today could weaken GBP in the near term.
• Barclays analysts remain bullish on the Pound versus the Euro, citing the UK's stronger resilience to tariffs results in less demand damage, offsetting the impact.
  • GBP/EUR is up 0.2% this week, trading in the higher 1.17 levels.

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