On Wednesday, British steelmakers urged the government to finalise details of the UK’s trade deal with the US as uncertainty surrounding tariffs forced some companies to defer or cancel orders over concerns the 50% levy may still apply after 9th July. Currently, the 50% tariff on steel will apply to every country apart from the UK, which has agreed a lower level of 25% as the only country to have forged a deal with the US so far. There is expectation however that the UK steel tariff will drop to zero, with Prime Minister Sir Keir Starmer stating that this was expected within “a couple of weeks”.
British steelmakers urged the government to finalise details of the UK’s trade deal with the US as uncertainty surrounding tariffs forced some companies to defer or cancel orders over concerns the 50% levy may still apply after 9th July.
On Thursday, the European Central Bank cut its benchmark interest rate by 25 basis points to 2%. This is the eighth quarter of a percentage point cut in 12 months, bringing interest rates to half of their recent peak of 4%. Markets barely reacted to the latest rate cut, as the move was largely expected, although the euro strengthened against the USD dollar, as ECB President Christine Lagarde surprised traders by guiding that the central bank’s rate cutting cycle has “nearly concluded”. In further reaction, expectations of two further rate cuts this year were reined in and swaps markets are now pricing just one more reduction in 2025.
The European Central Bank cut its benchmark interest rate by 25 basis points to 2%. This is the eighth quarter of a percentage point cut in 12 months, bringing interest rates to half of their recent peak of 4%.
Also on Thursday, the Office for National Statistics revealed UK inflation was overstated by 0.1 percentage points in April due to an error in figures provided by the Department for Transport. The annual inflation figure should have come in at 3.4%, not the 3.5% that was reported. The inflation figure affects government bond markets, currencies, and Bank of England interest rate decisions; the BoE have already commented on the difficulty of their decision making due to the previous inaccuracy of official data. The ONS confirmed no other data periods had been affected.
Our specialist's final thought
"The inflation figure affects government bond markets, currencies, and Bank of England interest rate decisions; the BoE have already commented on the difficulty of their decision making due to the previous inaccuracy of official data. The ONS confirmed no other data periods had been affected."
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