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What’s happening: The British pound declined against the US dollar on Tuesday but remained close to its strongest level in more than three years.
What happened: The US dollar recovered some losses during Tuesday’s session, following reports of the Trump administration looking to ease tariffs.
Investors continued to be cautious about the prospects of a trade war between the US and China.
Why it matters: The US dollar has fallen sharply with President Donald Trump slapping record high tariffs on some of the country’s largest trading partners.
More recently, Trump put a pause on certain tariffs, while watering down his sweeping tariffs on other imports, granting a reprieve to US manufacturers. China rolled back its retaliatory tariffs on certain US imports, giving investors hope of a de-escalation in the trade war between the world’s two largest economies.
The US dollar recovered slightly on Tuesday, exerting pressure on the GBP/USD forex pair. The US dollar index, which measures the greenback’s performance versus a basket of major peers, rose to 99.24.
Investors have been flocking to the British pound amid fears of the US economy facing a rise in inflation and a subsequent recession. Markets shrug off mixed economic data releases by the UK last week. The UK announced better-than-expected retail sales for March, signalling resilient demand, while PMI data came in weaker than expected due to macro uncertainty.
Despite the sterling edging lower on Tuesday, it remained on course to recording its biggest monthly performance versus the greenback since late 2023.
The GBP/USD had surged to 1.3444 on Monday to reach its strongest level since February 2022. The forex pair fell 0.2% to 1.3409 on Tuesday but remains on track to record close to a 4% hike in April.
The FTSE 100 rose 0.55% to close at 8,463.46 on Tuesday. This being the 12th consecutive session of gains made it the longest winning streak since 2017.
What to watch: Investors will continue monitoring announcements related to tariffs from the US, which are expected to significantly impact the forex market ahead.
Investors await the release of major economic reports from the US for insights into the impact of tariff-led uncertainty on economic growth. Data on US jobs will remain in focus this week, along with preliminary growth numbers and the Fed’s favoured inflation gauge, the core PCE report.
Context: Shares of Coca-Cola Company gained on Tuesday after the soft drink company released better-than-expected first-quarter earnings.
Details: Recent price hikes and upbeat demand for sodas helped the beverage giant surpass market expectations in the first quarter. However, Coca-Cola warned that costs could be impacted by US tariffs and consumer sentiment ahead.
The company’s first-quarter sales contracted by 1.77% year-over-year to $11.1 billion, slightly lower than Wall Street expectations of $11.14 billion. Adjusted earnings came in at 73 cents per share, topping consensus estimates of 72 cents per share.
Organic revenues in Europe, the Middle East and Africa climbed 7% during the quarter, while revenue in North America rose 3%.
Coca-Cola guided to 2025 organic revenue growth of 5%-6% and comparable currency neutral earnings growth of 7%-9%. The company also projected adjusted earnings of $2.94-$2.97 per share, broadly in-line with market estimates of $2.96 per share.
How shares responded: Shares of Coca-Cola gained 0.8% to close at $72.35 on Tuesday, following the release of quarterly results. The stock has added around 10% over the past six months.
What to watch: Investors will continue assessing US tariff news, which could weigh on the company’s results ahead.
Other Markets: Asian indices traded mixed this morning, with China’s Shanghai Composite and Hong Kong’s Hang Seng index down by 0.10% and 0.33%, respectively, and Japan’s Nikkei 225 up by 0.15%.
Russia has dismissed a proposal from Ukraine to extend the unilateral three-day ceasefire to 30 days. The news sent the RUB/USD lower in forex trading this morning.
Philippines’ producer prices rose by 0.6% year-over-year in March, easing from the 0.9% rise in the previous month, which lent support to the PHP/USD forex pair.
China’s official NBS non-manufacturing PMI fell to 50.4 in April, from 50.8 in the previous month. The latest reading missing market estimates of 50.7 sent the CNY/USD pair lower in forex trading this morning.
Australia’s annual inflation rate came in unchanged at 2.4% in the first quarter, lending support to the AUD/USD forex pair.
New Zealand’s ANZ Business Outlook Index tumbled to 49.3 in April, from 57.5 in March. The region’s business mood falling to its weakest level since July 2024 sent the NZD/USD pair lower in forex trading this morning.
Germany’s GDP growth rate (1200 UAE Time), Italy’s GDP growth rate (1200 UAE Time), PPI (1300 UAE Time) and inflation rate (1300 UAE Time), Spain’s current account (1200 UAE Time), Turkey’s tourist arrivals (1200 UAE Time), Russia’s M2 money supply (1205 UAE Time), business confidence (2000 UAE Time), real wage growth (2000 UAE Time), retail sales (2000 UAE Time) and unemployment rate (2100 UAE Time), Eurozone’s GDP growth rate (1300 UAE Time), India’s government budget value (1430 UAE Time) and M3 money supply (1530 UAE Time), US MBA mortgage applications (1500 UAE Time), ADP employment change (1615 UAE Time), GDP growth rate (1630 UAE Time), employment cost index (1630 UAE Time), core PCE prices (1630 UAE Time), real consumer spending (1630 UAE Time), Chicago PMI (1745 UAE Time), personal income (1800 UAE Time), personal spending (1800 UAE Time), pending home sales (1800 UAE Time), EIA crude oil stocks change (1830 UAE Time), EIA gasoline stocks change (1830 UAE Time) and EIA distillate stocks change (1830 UAE Time), Brazil’s bank lending (1530 UAE Time), gross debt to GDP (1530 UAE Time), nominal budget balance (1530 UAE Time) and unemployment rate (1600 UAE Time), Mexico’s GDP growth rate (1600 UAE Time), South Africa’s balance of trade (1600 UAE Time), as well as Canada’s GDP (1630 UAE Time).
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