EUR/GBP remains firm near 0.8250 as concerns over potential US tariffs on the UK escalate

• EUR/GBP gains traction as worries over potential US tariffs on the UK intensify.
• President Trump signaled the potential imposition of trade tariffs on the UK after meeting with PM Keir Starmer late Thursday.
• The Euro comes under selling pressure as risk aversion rises amid renewed US-EU trade tensions.

EUR/GBP attracts buyers after two consecutive sessions of losses, trading around 0.8260 during Asian hours on Friday. The currency pair’s upside could be linked to a weakened Pound Sterling (GBP) following US President Donald Trump’s meeting with UK Prime Minister Keir Starmer late Thursday. Trump swiftly announced the possibility of trade tariffs on the UK unless the terms of a trade deal with the US—currently ambiguous—are agreed upon within an unspecified timeframe.

On Wednesday, UK Chancellor of the Exchequer Rachel Reeves expressed confidence that trade and investment between the US and UK would remain stable despite the new US administration. She noted, “The last time President Trump was in the White House, trade and investment flows between our two countries increased, and I've got every confidence that that can happen again.”

The British Pound may have faced additional pressure after Bank of England (BoE) Monetary Policy Committee Member Swati Dhingra signaled support for more aggressive monetary easing, favoring four rate cuts. Dhingra explained that while the media often associates "gradual" with 25 basis points (bps) per quarter, maintaining this pace throughout 2025 would still leave monetary policy excessively restrictive by year-end.

However, the EUR/GBP cross saw a pullback as the risk-sensitive Euro faced selling pressure amid heightened risk aversion following renewed US-EU trade tensions. US President Donald Trump suggested imposing “reciprocal” tariffs on the European Union (EU) as early as April.

During a press conference on Wednesday, Trump announced plans to implement a 25% tariff on “cars and other things” from the Eurozone “very soon.” In response, a European Commission (EC) spokesperson asserted, “The EU will react firmly and immediately against unjustified barriers to free and fair trade.”