Key Market Takeaways

• 💷 Sterling Surges: GBP/USD climbs to its strongest level since February 2022, extending its recent upward momentum.
• 🛒 UK Food Prices Climb: Food inflation in the UK reaches a 12-month peak, renewing cost-of-living concerns and potentially influencing consumer behaviour and policy outlook.

Market Recap:

Global Markets React to Tariff Delay:

Markets opened on a positive note after reports emerged over the bank holiday weekend that President Trump will delay the implementation of 50% tariffs on EU goods until July 9th. The move was interpreted as a temporary de-escalation in trade tensions, prompting a lift in equity markets and causing the U.S. dollar index to slide to its lowest level in over a month.

💷 Sterling Hits New Highs:

The GBP/USD pair pushed higher, touching levels not seen since February 2022, as investors shifted away from the dollar and toward higher-yielding or more stable alternatives.

🛒 UK Food Prices Climb:

UK households continue to feel the pressure as food inflation hits a new 12-month high. Rising costs are largely tied to supermarkets facing higher input and operational expenses following measures introduced in the Autumn Budget. This trend could influence consumer spending and add complexity to the Bank of England’s rate path.

What This Means:

• Tariff delay = short-term market relief, but uncertainty remains ahead of July.
• GBP strength may continue if dollar softness persists and UK data holds steady.
• UK inflation concerns could shape both fiscal policy and consumer behaviour in the months ahead.

Today’s Market Update:

🇯🇵 Yen Under Pressure:

The Japanese yen opened weaker amid market chatter suggesting Japan may scale back issuance of longer-term government bonds. This shift in debt strategy has tempered demand for the currency, contributing to early session softness.

🇫🇷 Euro Slips on Inflation Miss:

France’s inflation data for May underwhelmed expectations, with CPI rising just 0.7% vs. 0.9% forecast. The softer print put mild pressure on the euro, keeping GBPEUR trading comfortably near April’s highs.

🔊 Eyes on Central Bank Commentary:

Today’s calendar features several key speakers from the ECB and the Federal Reserve, whose comments may offer clues on future policy direction. In addition, EU consumer confidence data is on deck, potentially adding further momentum or hesitation to euro positioning.

💵 USD Maintains Edge:

The US dollar remains firm, with levels not seen since February 2022—a reflection of sustained demand in uncertain global conditions. This continues to support USD buying strategies for those looking to capitalise on relative strength.

27th May 2025

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