GBPUSD TECHS: Trend Outlook Remains Bullish

A new survey from Elon University found that, “A substantial majority of Americans anticipate rising costs due to import tariffs. More than 80% of respondents said they believe tariffs will lead to increased prices, with 45% expecting significant hikes. 

• “The impact on small businesses is a major concern, as 50% of respondents look for negative consequences, while only 19% expect a positive impact. The partisan divide is stark, with 93% of Democrats and 79% of Independents saying tariffs will lead to higher prices, compared with only 69% of Republicans.”
• Jason Husser, director of the Elon University Poll, said: “A majority of those who voted for Trump anticipate tariffs will lead to higher prices for consumers and challenges for U.S. exporters. However, this is offset by a majority of Trump voters who see tariffs as something that will strengthen American manufacturing and jobs.”
• Politico notes, according to polling from British firm Public First, "more Americans oppose Trump’s threatened tariffs against Canada and Mexico than support them... “[J]ust 28 percent of American adults supported specifically applying tariffs to Canada, while 43 percent were opposed. Tariffs on Mexico were also slightly unpopular, with 35 percent of adults supportive and 39 percent opposed.”

Figure 1: What will Proposed Import Tariffs do to Prices?

Source: Elon University

• Headlines after the European close on Wednesday have sparked currency markets into life, as President Trump has announced that tariffs on Mexico and Canada will now be implemented on April 02, later than the prior March 04 deadline.
• The extension to this deadline has provided optimism, and the Canadian dollar and Mexican peso have rallied as a result. USDCAD fell from 1.4360 to 1.4300, while USDMXN fell from 20.47 to 20.29 lows.
• Optimism has been tempered since, as markets digest the headlines. Although the extension could be seen as providing more time to negotiate broader trade deals, Trump mentioning that the US is “not stopping the tariffs” is offsetting the initial price spikes.
• In contrast, President trump took a firmer stance on the EU, stating that the decision on tariffs on the EU is 25% and that details will be “coming soon”. This prompted some volatility for the single currency, with EURUSD slipping from key resistance around 1.0530 to 1.0485 in short order. EURCAD was also sharply lower on the contradictory sentiment, trading the entire day's range in quick fashion, from 1.5095 to 1.5010 lows.
• Overall on the session, AUD and NZD have exhibited underperformance as risk sentiment continues to cautiously tread water. Additionally, lower than expected inflation data in Australia as well as potential flows related to value date month-end may have weighed on AUDUSD, which hit intra-day lows of 0.6300. Attention below here is on 0.6231, the Feb 10 low.
• GBP trades more healthily, and cable has traded back above 1.27 for the first time since December 18, keeping a bullish trend condition intact. In similar vein, EURGBP has been edging lower to levels around 0.8265 at typing. The cross continues to narrow the gap towards 0.8203, the Mar 7 ‘22 low and a lowest point of a multi-year range.
• Swiss GDP and Spanish HICP inflation cross tomorrow in Europe, before the 2nd reading of US GDP is scheduled, alongside jobless claims and durable goods data.

RRP usage climbs to an even $126.058B this afternoon from $96.000B on Tuesday. Compares to Friday, February 14 low of $58.770B - the lowest level since mid-April 2021. The number of counterparties at 37 from 36 prior.