Pound edges lower following economic growth forecast cut
The pound dipped nearly 0.2% against the dollar (GBPUSD=X) to trade at $1.3519 on Tuesday, after the Organisation of Economic Cooperation and Development (OECD) cut its forecasts for growth in 2025 and 2026.
The OECD warned that the economic outlook was becoming "increasingly challenging" and predicted that that global gross domestic product (GDP) growth will slow from 3.3% in 2024 to 2.9% this year and in 2026.
The organisation said that was based on the 'on the technical assumption that tariff rates as of mid-May are sustained despite ongoing legal challenges."
"The slowdown is concentrated in the United States, Canada and Mexico, with China and other economies expected to see smaller downward adjustments," it said.
For the UK, the OECD lowered it economic growth forecast to 1.3% this year, from the 1.4% it predicted in March. It expected growth to slow further in 2026 to 1%, which was also lower than a previous forecast of 1.2%.
Russ Mould, investment director at AJ Bell (AJB.L), said that while the OECD's global growth forecast cut was "only a small revision ... it's still enough to cause investors some digestion as they consume their morning news."
"The 90-day pause on tariffs has just over a month before expiration, meaning the pressure is on countries to do deals with the Trump administration," he said. "Reports suggest that [US president Donald] Trump wants best offers on trade negotiations by Wednesday, perhaps to avoid any last-minute rush or stalemate situations."
Read more: FTSE 100 LIVE: Stocks head lower as global growth set to slow this year amid Trump tariffs
On Monday, China hit back at Trump's claim it had violated the temporary trade agreement between the two countries, while the EU said it opposed the president's doubling of tariffs on steel and aluminium imports.
The dollar index (DX-Y.NYB), which pits the greenback against a basket of global currencies, ticked up 0.2% at 98.91. It has lost about 0.9% over the past five sessions.
Markets have endured wild swings since Trump unveiled sweeping global tariffs in April. Last week, a new source of uncertainty over his trade policy emerged when a federal appeals court quickly paused a ruling that would have blocked most of the president's tariffs as illegal. The Trump administration is due to respond to the appeals court by Monday 9 June.
Sterling was slightly higher against the euro (GBPEUR=X), meanwhile, hitting the €1.184 mark ahead of the eurozone's fresh flash inflation reading and interest rate decision later in the week.
Eurozone inflation dipped to 1.9% year-on-year in May, according to the latest flash estimates, slightly below the ECB's 2% target.
Oil prices were muted on Tuesday morning, as concerns about economic growth appeared to cap gains from a OPEC+-induced rally in the previous session.
Brent crude futures (BZ=F) were flat at $64.59 a barrel, at the time of writing, while West Texas Intermediate futures (CL=F) dipped 0.1% at $62.43 a barrel.
The Organization of the Petroleum Exporting Countries and its allies — known as OPEC+ — said in a statement on Saturday that its eight participating countries had agreed to increase output by 411,000 barrels per day.
Stocks: Create your watchlist and portfolio
Jim Reid, a market strategist at Deutsche Bank (DBK.DE), said: "An increase of this magnitude was flagged on the wires on Friday afternoon and there was some prospect of it being higher than this.
He said that oil futures were higher on Monday morning "in a relief that the output increase wasn't higher."
However, the OECD's economic growth forecast cut appeared to reignite fears of a global slowdown and how this could weigh on demand for fuel.
Gold prices fell declined on Tuesday, as a stronger dollar weighed on the precious metal.
Gold futures (GC=F) fell 0.4% at $3,382.30 per ounce at the time of writing, while the spot gold price was down 0.7% to $3,356.98 per ounce.
A stronger greenback tends to weigh on gold prices, as the precious metal is typically priced in dollars, meaning a rise in the currency makes the commodity more expensive for foreign buyers.
Read more: Trending tickers: Meta, TSMC, BioNTech, Applied Digital and BAT
In a note on Tuesday, Bank of America (BAC) strategists said that they were bullish on gold over a one-month horizon.
They acknowledged that gold was "facing headwinds near-term as the market adjusts to Trump's economic policies, which may bring about higher inflation and a stronger USD [dollar]."
"There is also a risk the EM (emerging market) central bank reduce gold buying, if domestic currencies decline on tariffs," they said.
"Yet, ongoing macro uncertainty and rising global debt levels remain supportive," the strategists added.
Read more:
What is the Pension Investment Review?
Eurozone inflation cools to 1.9% in May paving way for interest rate cut
UK 'bargain' stocks that have outperformed the market long-termSe produjo un error al recuperar la información
Inicia sesión para acceder a tu portafolio
Se produjo un error al recuperar la información
Se produjo un error al recuperar la información
Se produjo un error al recuperar la información
Se produjo un error al recuperar la información
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
New York Times
11 minutes ago
- New York Times
Tariffs Make the World Poorer and More Perilous
President Trump's on-again-off-again tariffs have disrupted the global trading system and caused whiplash for businesses and consumers. He has vacillated mightily, announcing tariffs on imports from practically every U.S. trading partner and then pausing or rolling some back. Legal challenges have added to the turmoil. No matter where the tariffs eventually settle, they will have repercussions that go far beyond trade. Raising tariffs, or at least the constant looming threat of that happening, undermines trade and weakens economic links that stabilize international relations. By shredding rules that have governed trade and by disregarding free trade agreements, Mr. Trump has undercut the entire international rules-based order. This includes ignoring the rules of the World Trade Organization, hindering its work and threatening to abandon it. Denying low-income countries with growing young work forces the opportunity to develop their economies through trade could lead to a surge of migrants that will put pressure on the countries that receive them. A retreat from free trade will hurt consumers worldwide through higher prices and more limited choices, raising the prospect of political discontent in their countries. Whatever their ostensible objectives, the Trump tariffs will make the world a poorer and more perilous place. A full-scale retreat from global trade is unlikely, but international commerce is already shifting in ways that can deepen geopolitical fissures. Business interests have long kept relationships between rivals on an even keel. In the past two decades, for instance, U.S.-China frictions have been smoothed by the eagerness of American companies to sell their products and services to China's rapidly growing middle class and to use Chinese suppliers. American investors keen to gain access to China's financial markets played a similar role. When China manipulated its currency during the 2000s to gain a competitive advantage for its exports, the presence of U.S. commercial interests ensured that the United States did not take punitive action. For China, the benefits from opening up to American businesses and investors pushed Beijing, for a while, at least, to align its own economy with U.S. free market principles. It eased restrictions on investments flowing into and out of the country, and even took steps to reduce government intervention in foreign exchange and other financial markets. Want all of The Times? Subscribe.
UPI
16 minutes ago
- UPI
Trump issues travel ban from 12 countries; 7 nations restricted
President Donald Trump holds a press conference in the Oval Office at the White House on Friday. Onv Wednesday, he issued a travel ban on 12 countries and limited ones for seven others. Photo by Francis Chung/UPI | License Photo June 4 (UPI) -- President Donald Trump on Wednesday issued a proclamation to "fully restrict and limit" entry of people from 12 foreign countries starting at 12:01 EDT Monday. Citing national security concerns, Trump issued the ban on nationals from Afghanistan, Burma, Chad, Republic of the Congo, Equatorial Guinea, Eritrea, Haiti, Iran, Libya, Somalia, Sudan and Yemen. Also, he partially restricted and limited entry from seven countries: Burundi, Cuba, Laos, Sierra Leone, Togo, Turkmenistan and Venezuela. Of the 19 named nations, 10 are in Africa. "These restrictions distinguish between, but apply to both, the entry of immigrants and nonimmigrants," the order states about the two designations," the proclamation reads. There are exceptions for lawful permanent residents, existing visa holders, certain visa categories and individuals whose entry serves US national interests. Later Wednesday, he posted a video on Truth Social announcing the bans. "The list is subject to revision based on whether material improvements are made," Trump said. "And likewise new countries can be added as threats emerge around the world, but we will not allow people to enter our country who wish to do us harm and nothing will stop us from keeping America safe." The proclamation reads: "As President, I must act to protect the national security and national interest of the United States and its people. I remain committed to engaging with those countries willing to cooperate to improve information-sharing and identity-management procedures, and to address both terrorism-related and public-safety risks. Nationals of some countries also pose significant risks of overstaying their visas in the United States, which increases burdens on immigration and law enforcement components of the United States, and often exacerbates other risks related to national security and public safety." White House deputy press secretary Abigail Jackson wrote on X: "President Trump is fulfilling his promise to protect Americans from dangerous foreign actors that want to come to our country and cause us harm. These commonsense restrictions are country-specific and include places that lack proper vetting, exhibit high visa overstay rates, or fail to share identity and threat information." On his first day in office on Jan. 20, Trump signed an executive order that it is the policy of the United States to "protect its citizens from aliens who intend to commit terrorist attacks, threaten our national security, espouse hateful ideology, or otherwise exploit the immigration laws for malevolent purposes." Secretary of State Marco Rubio was ordered to compile a list of countries "for which vetting and screening information is so deficient as to warrant a partial or full suspension on the admission of nationals from those countries." The proclamation said: "Some of the countries with inadequacies face significant challenges to reform efforts. Others have made important improvements to their protocols and procedures, and I commend them for these efforts. But until countries with identified inadequacies address them, members of my Cabinet have recommended certain conditional restrictions and limitations." CNN reported Trump decided to sign the proclamation after the antisemitic attack in Boulder, Colo., though the system didn't come to the United States from the restricted countries. Mohamed Sabry Soliman, 45, of Colorado Springs, has been charged with a federal hate crime and he is facing 16 state counts of attempted murder on Monday. Soliman, an Egyptian national who spent time in Kuwait, entered California in August 2022 on a B2 visa that expired in February 2023 and his asylum claim was pending. Alex Nowrasteh, who works for Cato Institute, a nonpartisan and independent public policy research organization, said the threat of foreign-born terrorists is rare. "A single terrorist from those countries murdered one person in an attack on US soil: Emanuel Kidega Samson from Sudan, who committed an attack motivated by anti-white animus in 2017," Nowrasteh wrote. The annual chance of being murdered by a terrorist from one of the banned countries from 1975 to the end of 2024 was about 1 in 13.9 billion per year." He also noted that travelers and immigrants from the 12 banned countries have a nationwide incarceration rate of 370 per 100,000 in 2023 for the 18-54 aged population, which 70 percent below that of native-born Americans. The data came from the U.S. Census and American Community Survey Data. During his first term, Trump banned travel by citizens of predominantly Muslim countries, including Iraq, Iran, Libya, Somalia, Sudan, Syria and Yemen. Amid legal challenges, it was modified and upheld by the Supreme Court in 2018. When President Joe Biden took office in 2021, he repealed it.
Hamilton Spectator
22 minutes ago
- Hamilton Spectator
New German leader plans to discuss Ukraine and trade with Trump in Oval Office visit
WASHINGTON (AP) — Germany's new leader is meeting President Donald Trump in Washington on Thursday as he works to keep the U.S. on board with Western support for Ukraine, help defuse trade tensions that pose a risk to Europe's biggest economy and further bolster his country's long-criticized military spending. Trump and Chancellor Friedrich Merz have spoken several times by phone, either bilaterally or with other European leaders, since Merz took office on May 6. German officials say the two leaders have started to build a 'decent' relationship, with Merz wanting to avoid the antagonism that defined Trump's relationship with one of his predecessors, Angela Merkel , in Trump's first term. The 69-year-old Merz is a conservative former rival of Merkel's who took over her party after she retired from politics. Merz also comes to office with an extensive business background — something that could align him with Trump. A White House official said topics that Trump is likely to raise with Merz include Germany's defense spending, trade, Ukraine and what the official called 'democratic backsliding,' saying the administration's view is that shared values such as freedom of speech have deteriorated in Germany and the country should reverse course. The official spoke on condition of anonymity to preview the discussions. Merz will want to avoid an Oval Office showdown of the kind that Ukrainian President Volodymyr Zelenskyy and South African President Cyril Ramaphosa experienced in recent months. Asked about the risk of a White House blow-up, Merz spokesperson Stefan Kornelius said on Monday that the chancellor is 'well-prepared' for the meeting and that he and Trump have 'built up a decent relationship, at least by phone' and via text messaging. Keeping Ukraine's Western backers together Merz has thrown himself into diplomacy on Ukraine, traveling to Kyiv with fellow European leaders days after taking office and receiving Zelenskyy in Berlin last week. He has thanked Trump for his support for an unconditional ceasefire while rejecting the idea of 'dictated peace' or the 'subjugation' of Ukraine and advocating for more sanctions against Russia. The White House official said Trump on Thursday will stress that direct peace talks must continue. In their first phone call since Merz became chancellor, Trump said he would support the efforts of Germany and other European countries to achieve peace, according to a readout from the German government. Merz also said last month that 'it is of paramount importance that the political West not let itself be divided, so I will continue to make every effort to produce the greatest possible unity between the European and American partners.' Under Merz's immediate predecessor, Olaf Scholz, Germany became the second-biggest supplier of military aid to Ukraine after the United States. Merz has vowed to keep up the support and last week pledged to help Ukraine develop its own long-range missile systems that would be free of any range limits. Military spending At home, Merz's government is intensifying a drive that Scholz started to bolster the German military after Russia launched its full-scale invasion of Ukraine. In Trump's first term, Berlin was a target of his ire for failing to meet the current NATO target of spending 2% of gross domestic product on defense, and Trump is now demanding at least 5% from allies. The White House official said the upcoming NATO summit in the Netherlands later this month is a 'good opportunity' for Germany to commit to meeting that 5% mark. Scholz set up a 100 billion euro ($115 billion) special fund to modernize Germany's armed forces — called the Bundeswehr — which had suffered from years of neglect. Germany has met the 2% target thanks to the fund, but it will be used up in 2027. Merz has said that 'the government will in the future provide all the financing the Bundeswehr needs to become the strongest conventional army in Europe.' He has endorsed a plan for all allies to aim to spend 3.5% of GDP on their defense budgets by 2032, plus an extra 1.5% on potentially defense-related things like infrastructure. Germany's economy and tariffs Another top priority for Merz is to get Germany's economy , Europe's biggest, moving again after it shrank the past two years. He wants to make it a 'locomotive of growth,' but Trump's tariff threats are a potential obstacle for a country whose exports have been a key strength. At present, the economy is forecast to stagnate in 2025. Germany exported $160 billion worth of goods to the U.S. last year, according to the Census Bureau. That was about $85 billion more than what the U.S. sent to Germany, a trade deficit that Trump wants to erase. The U.S. president has specifically gone after the German auto sector, which includes major brands such as Audi, BMW, Mercedes Benz, Porsche and Volkswagen. Americans bought $36 billion worth of cars, trucks and auto parts from Germany last year, while the Germans purchased $10.2 billion worth of vehicles and parts from the U.S. Trump's 25% tariff on autos and parts is specifically designed to increase the cost of German-made automobiles in hopes of causing them to move their factories to the U.S., even though many of the companies already have plants in the U.S. with Volkswagen in Tennessee, BMW in South Carolina and Mercedes-Benz in Alabama and South Carolina. There's only so much Merz can achieve on his view that tariffs 'benefit no one and damage everyone' while in Washington, as trade negotiations are a matter for the European Union's executive commission. Trump recently delayed a planned 50% tariff on goods coming from the European Union, which would have otherwise gone into effect this month. Far-right tensions One source of strain in recent months is a speech Vice President JD Vance gave in Munich shortly before Germany's election in February, in which he lectured European leaders about the state of democracy on the continent and said there is no place for 'firewalls.' That term is frequently used to describe mainstream German parties' refusal to work with the far-right Alternative for Germany , which finished second in the election and is now the biggest opposition party. Merz criticized the comments. He told ARD television last month that it isn't the place of a U.S. vice president 'to say something like that to us in Germany; I wouldn't do it in America, either.' ___ Moulson reported from Berlin. Associated Press writer Josh Boak in Washington contributed to this report. Error! Sorry, there was an error processing your request. There was a problem with the recaptcha. Please try again. You may unsubscribe at any time. By signing up, you agree to our terms of use and privacy policy . This site is protected by reCAPTCHA and the Google privacy policy and terms of service apply. Want more of the latest from us? Sign up for more at our newsletter page .
