Sterling continues to shine on trade deal prospects
Sterling rose in European trade on Wednesday against a basket of major rivals, extending gains against the dollar for the seventh straight session and hitting new six-month highs on strong prospects for a trade deal with the US.
Now traders await a bunch of important UK data this week, which would provide fresh pricing for the odds of a BOE rate cut in May.
The Price
The GBP/USD price rose 0.3% today to $1.3268, the highest since October 3, 2024, with a session-low at $1.3222.
The pound rose 0.35% on Tuesday against the greenback, the sixth profit in a row, and the longest such streak of daily gains since August 2024.
Trade Deal
In a statement released yesterday, US Vice President JD Vance said there’s a strong chance for signing a trade deal with the UK, bolstering the economic relationship between both countries.
The UK recently escaped the worst of aggressive US tariffs, reducing the pressure on its financial markets and bolstering investor confidence in UK assets.
UK Rates
Concerns about a potential global recession receded, in turn reducing the pressure on global central banks to move quickly with policy easing and rate cuts.
Speculation about reduced UK government spending and higher taxes rose after UK Treasury Secretary Rachel Reeves asserted the government’s commitment to strict financial rules..
Recently, the odds of a UK 0.25% interest rate cut in May fell from 75% to 55%.
Yen climbs as the trade war escalates
The Japanese yen rose in Asian trade on Wednesday against a basket of major rivals, resuming gains against the dollar after a short hiatus yesterday and approaching seven-month highs on renewed haven demand as the trade war escalates.
The US government told Nvidia it’ll need a license to sell chips to China and other countries, with the company warning it’ll carry a charge of $5.5 billion to export H20 chips to Beijing.
Otherwise, US President Donald Trump ordered an investigation into all basic metals, chips, and pharmaceutical imports, in preparation for potential tariffs, while Chinese authorities banned local airlines for shipping Boeing aeroplanes.
The Price
The USD/JPY price fell 0.55% to 142.46, with a session-high at 143.28.
The yen lost 0.2% on Tuesday against the greenback, the first loss in four days on profit-taking away from a seven-month high at 142.05.
Nvidia Restrictions
On April 9, the US government told Nvidia it’ll need a license to export its chips to other countries, with a $5.5 billion charge now linked to the company’s GPU exports to China.
During Biden’s administration, the US limited AI chip exports in 2022, then updated the rules in the next year to ban the sales of more advanced AI processors.
The H20 Nvidia chips are AI chips designed for China and adhere to US export limits, and made Nvidia earnings between $12 billion and $15 billion in 2025.
Nvidia warned that chip sales in China fell sharply last year as the competition expanded, chiefly from Huawei.
Escalating Trade War
US President Donald Trump ordered an investigation into all basic metals, chips, and pharmaceutical imports, in preparation for potential tariffs, while Chinese authorities banned local airlines for shipping Boeing aeroplanes.
The trade war still shows no sign of advancing with both sides stubbornly waiting for the other to yield.
Loonie falls after weak inflation data
The Canadian dollar fell against most major rivals on Tuesday following forecast-missing data.
Canada's consumer prices rose 2.3% y/y in March, below estimates of 2.7%, and down from 2.6% in the previous reading.
Core prices, excluding food and energy, rose 2.2%, below estimates of 2.7%, and down from 2.7% in the previous reading.
Aussie
The Australian dollar rose 0.2% as of 20:12 GMT against its US counterpart to 0.6343.
US Dollar
The dollar index rose 0.5% as of 19:41 GMT to 100.1, with a session-high at 100.2, and a low at 99.4.
US President Donald Trump recently hinted at a potential lifting of the 25% tariffs on imported automobiles and their parts to give companies time to build factories in the US.
Otherwise, a Bloomberg report indicated China has ordered local airline companies to not order any more Boeing shipments.
Wall Street edges up as investors assess the trade war
US stock indices advanced on Tuesday as investors assess the latest developments in the US trade war with the globe.
US President Donald Trump recently hinted at a potential lifting of the 25% tariffs on imported automobiles and their parts to give companies time to build factories in the US.
Otherwise, a Bloomberg report indicated China has ordered local airline companies to not order any more Boeing shipments.
On trading, Dow Jones rose 0.1% as of 15:42 GMT, or 45 points to 40,570 points, while S&P 500 added 0.21% to 5419 points, as NASDAQ climbed 0.2% to 16,874 points.