GBP: Testing the relative safe-haven status – ING

The UK’s goods exports to the US are worth just below 2% of GDP compared to 3% for the eurozone. It is no massive difference, but the EU has been much more in the focus of Trump’s confrontational foreign approach, ING’s FX analysts Francesco Pesole notes.

Downside risks for EUR/GBP in the near term

"In particular, Trump explicitly opened to a trade deal with the UK in previous months, putting British exports at the front of potential exemptions should negotiations follow today’s announcement. The more markets will see room for the initial tariff announcement being watered down via negotiations, the more sterling can outperform the euro."

"We mostly see downside risks for EUR/GBP in the near term, with a move below 0.830 very much possible. In the longer run, there will be room for a rebound as the Bank of England rate expectations can be repriced lower."