EUR/GBP steadies near 0.8450 due to risk-off mood following Trump tariff tensions

• EUR/GBP holds ground due to increased risk sentiment after fresh tariff threats from Trump.
• The BoE is expected to keep rates unchanged in June following recent key economic data.
• European Commission noted that Europe will retaliate against the Trump's plan to double tariffs on imported steel and aluminum.

EUR/GBP remains steady after registering gains in the previous two sessions, trading around 0.8430 during the early European hours on Monday. The currency cross moves little due to increased risk sentiment after US President Donald Trump threatened to double import tariffs on steel and aluminum, increasing them to 50% from 25%. The potential tariffs increase concerns regarding slow growth and renewed inflation in the United States.

The British Pound also draws support from increased expectations that the Bank of England (BoE) would pause easing monetary policy in June. The hotter-than-expected UK Consumer Price Index (CPI) and a robust growth in the UK Retail Sales data for April weakened the dovish bets surrounding the BoE's policy outlook.

Moreover, the International Monetary Fund (IMF) has increased its UK GDP growth forecast for the 2025 to 1.2% from its prior estimate of 1.1%. The upward revision came as Gross Domestic Product (GDP) showed that the economy expanded at a robust pace of 0.7% in the first quarter, following the 0.1% growth seen in the last quarter of 2024.

On Saturday, The European Commission (EC) said that Europe was prepared to fight back against the President Trump's plan to double tariffs on imported steel and aluminum. The Euro (EUR) may face challenges due to increased safe-haven demand amid escalating the trade fight between two of the world's largest economic powers.

President Trump, on May 25, delayed the tariff deadline on imports from the EU from June 1 to July 9. Meanwhile, the Brussels also agreed to accelerate trade talks with the United States to avoid a transatlantic trade war.