Euro-Pound Holds Steady as Tariffs and UK Data Weigh

Key Moments

EUR/GBP Holds Firm as US Trade Policy Sparks FX Repricing

EUR/GBP is little changed, holding near 0.8740 during Asian trading on Monday after clawing back losses from the previous session. The cross is stabilizing as both the Euro (EUR) and the Pound Sterling (GBP) advance against the US Dollar (USD) in the wake of a key US legal decision on tariffs.

The move follows a ruling by the US Supreme Court that tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were unlawful without approval from Congress. The decision has prompted a reassessment of US trade authority and its implications for global trade flows and major currencies.

US Tariff Framework in Flux After Supreme Court Ruling

In response to the Supreme Court decision, Trump indicated an intention to push forward with a new 15% global tariff using different trade statutes, keeping uncertainty around US trade rules elevated. US Treasury Secretary Scott Bessent, along with other White House officials, signaled that the administration would seek to maintain as many existing tariffs as possible by shifting to alternative legal justifications.

This evolving backdrop is influencing both the Euro and the Pound, as investors reassess relative policy risks and trade exposure against the USD. With both European and UK assets reacting to Washington’s legal and policy adjustments, EUR/GBP has remained broadly rangebound even as both currencies strengthen versus the dollar.

EU Puts US Trade Agreement on Hold

On the European policy front, the European Parliament’s trade chief stated that the European Union would move to suspend ratification of its trade deal with the United States until it obtains clearer direction from the administration on its trade agenda, according to Bloomberg. This stance adds another layer of uncertainty to the transatlantic trade outlook and to broader market sentiment surrounding European assets.

UK Macro Data Supports GBP, but Labor Softness Aids BoE Dovish Expectations

Recent United Kingdom data have offered support to the Pound Sterling. Retail Sales climbed 4.5% year-over-year in January, handily exceeding expectations of 2.8%. At the same time, business activity strengthened, with the February S&P Flash Purchasing Managers’ Index (PMI) signaling expansion in both services and manufacturing.

However, labor market indicators have been weaker. The unemployment rate increased in Q4 2025, reinforcing the argument for additional monetary policy easing by the Bank of England (BoE). Money market pricing reflects a strong probability, estimated between 75% and 80%, that the BoE will implement a 25-basis-point rate cut at its March policy meeting.

Focus on Germany’s IFO Business Climate Survey

Traders are now turning their attention to Germany’s IFO – Business Climate survey for February, scheduled for release later on Monday. The outcome may influence EUR price action and, by extension, the EUR/GBP cross.

German IFO Business Climate – Indicator Snapshot

The IFO – Business Climate index, compiled by the CESifo Group, is a widely followed barometer of German corporate sentiment. The survey covers more than 7,000 companies and assesses their views on current business conditions and short-term plans. Historically, stronger readings have been associated with a more constructive outlook for the Euro, while weaker results have tended to be viewed as negative for the currency.

According to the description, “The positive economic growth anticipates bullish movements for the EUR, while a low reading is seen as negative (or bearish).” Market participants will be watching whether the upcoming release confirms or challenges expectations embedded in the current consensus of 88.4, compared with the prior reading of 87.6.