Euro and pound rise against dollar as ‘Trumpcession’ fears grow

Euro and pound rise against dollar as ‘Trumpcession’ fears grow

The euro and the British pound have surged to their highest levels since the US election, as fears of a "Trumpcession" weigh on the dollar, as reported by The Guardian. The euro climbed to $1.093, breaking the $1.09 barrier for the first time since Donald Trump won the presidency, while the pound hit $1.295.

Market analysts attribute this shift to concerns over US economic stability, as Trump's tariff policies on Canada, Mexico, China, and the EU fuel fears of an economic slowdown. The dollar has weakened by 0.55% against a basket of major currencies, falling to its lowest level since mid-October.

Following Monday’s global sell-off, Asian markets showed mixed results. Japan’s Nikkei dropped 0.6%, while South Korea’s market fell 1.3%. However, Chinese indices managed to close slightly higher.

In Europe, early gains faded, with Germany’s DAX index remaining flat and French, Italian, and Spanish markets slipping between 0.4% and 0.7%. The FTSE 100 in London also declined by 0.7%, losing 61 points to 8,539.

“Market sentiment remains fragile,” said Stephen Innes of SPI Asset Management, warning that aggressive tariffs and spending cuts could stall US growth.

Trump publicly defended Elon Musk’s Tesla after the company’s stock suffered its largest single-day drop since 2020, falling 15% on Monday. Writing on Truth Social, Trump blamed "Radical Left Lunatics" for allegedly orchestrating a boycott against Tesla.

Tesla shares have now fallen more than 50% from their December peak, raising concerns about investor confidence in Musk's leadership.

UBS has raised its estimate of a US economic downturn to 30%, up from 25% last month, citing risks of stagflation and weaker economic growth. Investors are increasingly moving away from the dollar, seeking stability in the euro and yen.

Vasileios Gkionakis of Aviva Investors pointed to several factors boosting the euro: unwinding of Trump-related tariff trades, Germany’s fiscal policy shifts, and the European Central Bank’s cautious approach to rate cuts. He also noted that weaker US economic data and possible progress toward a ceasefire in Ukraine have contributed to the euro's strength.

Some analysts predict the euro could hit $1.15 by year-end, with further gains possible by 2026. Gkionakis believes the $1.15 target could be reached much sooner if current trends continue.