🇬🇧 Sterling Mixed as Tariff Volatility Weighs, Despite Resilient UK PMI Data
Last week brought mixed performance for Sterling. GBP/EUR traded relatively flat, opening around 1.14 and holding within a narrow range. In contrast, GBP/USD Cable came under notable pressure, sliding to four-week lows near 1.34 after President Trump’s tariff announcements sparked renewed global volatility, echoing market conditions seen in 2025.
Risk sentiment weakened sharply, driving the initial downside move. However, Cable begins the new week on firmer ground, posting an early Monday rally of around 0.4%, suggesting some recovery momentum is building. On the domestic front, UK data offered cautious optimism. February’s S&P Global Composite PMI rose to 53.9 from 53.7 in January, beating expectations of 53.4 and signalling continued expansion and early-year momentum. Despite this resilience, employment remains a weak spot, with the PMI recording a seventeenth consecutive monthly decline in jobs, led by further reductions in the services sector.
🇺🇸 Supreme Court Blocks Trump Tariffs, Markets React to Renewed Uncertainty
President Trump’s tariff agenda suffered a significant setback after the US Supreme Court ruled 6–3 against his use of special presidential powers to impose sweeping import tariffs. The administration has since indicated it will explore alternative legal avenues to reinstate the measures. Initial market reaction saw the US dollar strengthen against both the Euro and GBP.
However, early Monday trading has brought a reversal, with GBP and EUR recovering as markets digest the heightened policy uncertainty following the weekend developments. In response to the ruling, President Trump announced a fresh round of tariffs, raising rates to 15% just a day after the decision. US equities opened weaker across the board, while gold and silver rallied, reflecting investor caution and a shift toward safe-haven assets amid renewed dollar volatility.
🇪🇺 Euro Rebounds Sharply, Eyes German Data for Further Gains
As previously noted, the euro opened stronger on Monday, rebounding from Friday’s sharp decline following President Trump’s tariff announcement. After opening around 1.177, EUR/USD climbed to early session highs of 1.183, signalling a solid recovery and renewed resilience in the single currency. Looking ahead, the Euro could extend these gains later in the week, with key economic data due from Germany, the Eurozone’s largest economy. Any upside surprise from German figures may provide further support and help sustain the current upward momentum.
This Week’s Market Moving Data
This week will be shaped largely by the fallout from President Trump’s tariff developments, with markets closely watching for his next move. Ongoing uncertainty is likely to keep volatility elevated across global markets.
In terms of economic data, the spotlight will fall on Friday’s US inflation release, a key indicator for Federal Reserve expectations. Germany will also publish important inflation figures the same day, providing insight into price pressures within the Eurozone’s largest economy. By contrast, the UK faces a relatively quiet week on the data front, leaving sterling more exposed to external drivers and broader market sentiment.
Friday 27th February
US Producer Price Index ex Food & Energy
The Producer Price Index (PPI) ex Food & Energy is a key measure of underlying wholesale inflation and is closely watched as a leading indicator of future consumer price pressures. A higher than expected reading can strengthen the Dollar by reinforcing expectations of tighter Federal Reserve policy, while a weaker print may weigh on the currency by supporting the case for rate cuts.
German Consumer Price Index
German CPI is a key gauge of inflation in the Eurozone’s largest economy and heavily influences expectations for European Central Bank policy. A stronger than expected reading can support the euro by reducing the likelihood of ECB rate cuts, while softer inflation may weaken the currency by reinforcing expectations of a more accommodative stance.
