Pound Slides Amid Risk-off Mood; Swiss Franc Rises

(RTTNews) - The British pound weakened against other major currencies in the European session on Monday amid increased risk-off mood, as investors eyed progress in global trade negotiations ahead of the impending July 9 deadline for U.S. reciprocal tariffs.

Canada moved to calm tensions after reversing its decision to impose a Digital Service Tax (DST) on American technology companies.

U.S. President Donald Trump characterized trade in cars between the U.S. and Japan as unfair and floated the idea of keeping 25 percent tariffs on autos in place.

Elsewhere, a new trade agreement between the United States and the United Kingdom that reduces U.S. tariffs on British cars and aircraft parts officially came into effect today. 10% tariffs on products including engines and aircraft parts will be eliminated for the UK aerospace industry, and UK automakers can now export to the US under a lower 10% tariff quota.

In economic news, data from the Office for National Statistics showed that the UK economy expanded at a stronger pace in the first quarter as previously estimated on robust services and industrial production. Real gross domestic product grew 0.7 percent, unrevised from the first estimate. This followed 0.1 percent expansion in the fourth quarter and marked the fastest growth since the first quarter of 2024.

On the production-side, the services sector climbed 0.7 percent from the prior quarter, while construction output gained only 0.3 percent.

Industrial production advanced by more than estimated 1.3 percent, following falls in the previous three quarters. Within output, manufacturing output grew 1.1 percent, following a 0.6 percent drop in the previous quarter.

On a yearly basis, the economy expanded 1.3 percent in the first quarter, which was unrevised from the initial estimate.

In the European trading today, the pound fell to more than a 2-month low of 1.0913 against Swiss franc, from an early high of 1.0966. The pound is likely to find support around the 1.07 region.

Against the euro and the yen, the pound slipped to a 6-day low of 0.8563 and a 5-day low of 197.22 from early highs of 0.8540 and 198.46, respectively. If the pound extends its downtrend, it is likely to find support around 0.87 against the euro and 196.00 against the yen.

The pound edged down to 1.3693 against the U.S. dollar, from early highs of 1.3741. On the downside, 1.32 is seen as the next support level for the pound.

Meanwhile, the safe-haven Swiss franc strengthened against its major currencies in the European session on Monday.

In economic news, data from the KOF Swiss Economic Institute showed that a measure signaling future turning points in the Swiss economy decreased unexpectedly in June to the lowest level in six months. The economic barometer dropped to 96.1 in June from 98.6 in the previous month. The expected reading was 99.3.

Moreover, this was the lowest reading this year so far, indicating deterioration in the outlook for the Swiss economy.

The franc edged up to 0.9341 against the euro, 0.7695 against the U.S. dollar and 181.00 against the yen, from early lows of 0.9374, 0.7995 and 180.20, respectively. If the franc extends its uptrend, it is likely to find resistance around 0.92 against the euro, 0.77 against the greenback and 183.00 against the yen.

Looking ahead, Destatis publishes Germany's flash consumer and harmonized prices for June at 8:00 am ET. In May consumer price inflation steadied at 2.1 percent.

In the New York session, U.S. Chicago PMI for June and U.S. Dallas Fed manufacturing index for June is set to be published.