UK And India Seal Free Trade Agreement Slashing Tariffs, Barriers

Economic

Forex

Summary:

India and the UK sealed a free trade agreement eliminating tariffs on products ranging from cars to alcohol, finalizing a deal between two major economies at a time when US President Donald Trump’s tariff policies continue to disrupt global trade.

Broadcasters on Thursday aired footage showing UK Business and Trade Secretary Jonathan Reynolds and his Indian counterpart, Piyush Goyal, signing the agreement at a ceremony near London also attended by UK Chancellor of the Exchequer Rachel Reeves and Indian Minister of External Affairs Subrahmanyam Jaishankar. Indian prime minister Narendra Modi has also jetted in to mark the occasion with UK Prime Minister Keir Starmer.

The pact comes after three years of intense negotiations touching on thorny topics such as visas, tariff reductions and tax breaks. The two nations concluded talks in May, completing Britain’s biggest trade deal since Brexit and India’s most significant such agreement to date.

With Trump due to arrive in Scotland on Friday for a personal visit during which he’ll meet with Starmer, the signing comes as Britain works to flesh out the trade pact it agreed with the US. Meanwhile the New Delhi administration is racing to clinch a deal with Washington before Aug. 1, when higher tariffs are due to kick in.

For Modi, the trade deal with Britain reinforces his push to position India as a viable alternative for global supply chains looking to diversify. The pact — India’s first major one in a decade — signals that the South Asian nation is willing to lower its barriers to attract investments as it negotiates a bilateral trade deal with the US. It will also act as a springboard for India’s ongoing talks with European Union.

For Starmer, the deal will be a welcome step toward his goal of boosting economic growth in the UK. While it is expected to add £4.8 billion ($6.5 billion) to the UK’s annual economic output — a tiny increase to the size of the economy — Starmer’s Labour government hopes successive incremental wins will help encourage investment and turn around lackluster business sentiment.

As a part of the deal, some 90% of tariff lines will be reduced for British exports to India, including 85% that will be fully tariff-free within a decade. India meanwhile will see duty reductions on about 99% of tariff lines for goods shipped to Britain.

Levies on whisky and gin will be halved to 75% before reducing to 40% by the 10th year of the deal, while automotive industry tariffs will reduce to 10% — under a quota — from 110% over that period.

Two-way trade between the two nations stood at $21.9 billion in 2024, and the deal is expected to boost bilateral by £25.5 billion a year over the long run.

Source: Bloomberg Europe

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Gerik

Economic

Gradual Recovery Gains Momentum in the Euro Zone

Business activity across the euro zone accelerated in July, offering fresh signs that the region is emerging from an extended period of economic sluggishness. The HCOB flash composite Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 51.0 from 50.6 in June, marking the highest reading in 11 months. This figure exceeded both the 50.0 threshold that separates expansion from contraction and analysts’ forecast of 50.8.

The data suggest that after months of faltering output and weak demand, the euro zone economy is regaining some footing driven largely by strength in the service sector and a softening downturn in manufacturing.

Services Lead the Way While Manufacturing Inches Toward Growth

The services PMI climbed to 51.2 in July, up from 50.5 in June, and surpassed economists’ expectations of 50.7. This uptick reflects modest but steady improvement in consumer-facing sectors like hospitality, retail, and professional services critical components of the euro zone’s economic engine.

Manufacturing, while still below the growth threshold, posted its strongest reading in three years at 49.8, up from 49.5. While the index remains in contraction territory, the gain signals a possible end to the sector’s prolonged recession, according to Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank. He noted that although much of the current manufacturing activity stems from fulfilling backlogged orders rather than fresh demand, the rate at which backlogs are being cleared has slowed, indicating stabilization.

Demand Conditions Improve, But Remain Fragile

For the first time in over a year, the composite new business index did not decline, holding steady at 50.0 its highest level since May 2024. Though this indicates flat demand rather than expansion, it also marks a significant shift from persistent contractions seen throughout the past year.

This steadiness in demand suggests that business confidence may be recovering in response to improved macroeconomic stability, fading inflation pressures, and expectations of supportive policy measures from the European Central Bank (ECB).

Easing Inflation Supports Monetary Policy Outlook

Signs of cooling price pressures added to the cautiously optimistic tone. The services input prices index dropped to a nine-month low of 56.7, down from 58.1 in June, suggesting input cost growth is slowing. This aligns with the broader inflation trend: euro zone consumer prices rose by just 2.0% year-on-year in June, matching the ECB’s target.

With inflation appearing under control, markets widely expect the ECB to hold interest rates steady in its July meeting. According to a Reuters poll of 84 economists, the central bank is expected to cut rates once more before the end of the year, likely in September.

Encouraging Signs Amid Persistent Uncertainty

July’s PMI figures paint a cautiously encouraging picture of the euro zone economy. The service sector continues to do the heavy lifting, while manufacturing slowly emerges from its three-year downturn. With inflation falling into target range and business demand stabilizing, the ECB is positioned to maintain or cautiously ease policy, helping support the bloc’s recovery.

Nevertheless, risks remain. Global trade tensions, including potential U.S. tariffs and geopolitical shocks, could derail momentum. Domestic structural weaknesses, such as uneven fiscal support across member states and tepid investment, may also limit the pace of recovery. Still, the July PMI offers evidence that the euro zone is turning a corner however slowly.

Source: Reuters

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Samantha Luan

Economic

Forex

GBPUSD trade idea

The GBPUSD pair is undergoing a correction after seven consecutive sessions of growth. However, the current rally on intraday charts appears to be approaching exhaustion, increasing the likelihood of a local bearish correction. Under these conditions, the preferred strategy remains buying on pullbacks. The key support level stands at 1.3526. Today’s GBPUSD trade idea suggests placing a pending Buy Limit order.

Market sentiment for GBPUSD points to a predominance of negative outlooks – 60% vs 40%. The risk-to-reward ratio is 1:4. Potential profit is 155 pips at the first take-profit level and 160 pips at the second, while potential losses are limited to 40 pips.

GBPUSD trade idea for 24 July 2025

Trading plan

● Entry point: 1.3526

● Target 1: 1.3681

● Target 2: 1.3686

● Stop-Loss: 1.3486

AUDUSD trade idea

The medium-term outlook for AUDUSD remains bullish, despite the pair trading in overbought territory. A bearish divergence is expected to form, which could limit further growth and trigger a moderate downside correction. To buy on dips remains the preferred strategy. The key support level is located at 0.6585. Today’s AUDUSD trade idea suggests placing a pending Buy Limit order.

News sentiment for AUDUSD shows a strong tilt towards positive expectations – 64% vs 36%. The risk-to-reward ratio exceeds 1:5. Potential profit is 40 pips at the first take-profit level and 55 pips at the second, with potential losses limited to 10 pips.

AUDUSD trade idea for 24 July 2025

Trading plan

● Entry point: 0.6585

● Target 1: 0.6625

● Target 2: 0.6640

● Stop-Loss: 0.6575

EURUSD trade idea

The EURUSD pair is posting a four-day rally after rebounding from key levels, although signs of a corrective phase have started to emerge. Despite the current decline, the preferred strategy remains buying on dips. The key support level lies at 1.1701. Today’s EURUSD trade idea suggests placing a pending Buy Limit order.

News sentiment for EURUSD shows a notable predominance of positive expectations – 75% vs 25%. The risk-to-reward ratio exceeds 1:3. Potential profit is 120 pips at the first take-profit level and 148 pips at the second, with potential losses capped at 44 pips.

EURUSD trade idea for 24 July 2025

Trading plan

● Entry point: 1.1710

● Target 1: 1.1830

● Target 2: 1.1858

● Stop-Loss: 1.1666

Source: RoboForex

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Gerik

Economic

Marginal Expansion as Economy Struggles for Momentum

Germany’s private sector continued its tepid recovery in July, with the HCOB flash composite Purchasing Managers’ Index (PMI) slipping slightly to 50.3, down from 50.4 in June. Though still above the neutral 50.0 threshold, indicating expansion, the pace of growth remains weak and uneven across sectors. The result also missed economists’ expectations of 50.7, underscoring persistent headwinds for Europe’s largest economy.

The PMI combines output data from the manufacturing and services sectors, which together form more than two-thirds of Germany’s GDP. The stagnation reflects a fragile and uncertain economic landscape shaped by geopolitical tensions, soft global demand, and domestic political instability following last year’s snap elections.

Manufacturing Remains Subdued, but Shows Glimmers of Resilience

Manufacturing PMI for July rose marginally to 49.2 from 49.0, remaining below the key growth threshold but suggesting a gradual improvement in momentum. According to Hamburg Commercial Bank’s chief economist Cyrus de la Rubia, the sector’s performance remains “fragile” yet not devoid of optimism, particularly given that output has increased for five consecutive months.

This slow uptick in production is a potentially hopeful sign that industrial activity may be stabilizing. However, it continues to be weighed down by export weakness, elevated input costs, and lingering supply chain disruptions exacerbated by international trade disputes and U.S. tariff uncertainty.

Services Sector Shows Signs of Revival

On a more positive note, Germany’s services PMI rose to 50.1 in July from 49.7 in June, marking a four-month high and narrowly exceeding the consensus forecast of 50.0. After nearly a year of contraction, the sector registered its first rise in new business since mid-2024, suggesting that domestic demand could be slowly recovering.

This service-sector stabilization aligns with predictions that rising real wages and supportive fiscal policies may gradually boost household consumption. Government stimulus and social transfers are beginning to filter through, giving consumers slightly more spending power amid falling inflationary pressures.

Policy and Structural Challenges Persist

Despite these small improvements, the overall economic picture remains clouded by both domestic and external risks. Germany’s industrial sector remains exposed to global trade uncertainties, particularly with the looming U.S. tariff deadline. Domestically, businesses face a structurally high tax burden and regulatory pressure to accelerate the green transition.

Additionally, the impact of tighter monetary policy from the European Central Bank in previous quarters may still be weighing on credit availability and investment decisions, particularly for small and medium-sized enterprises.

A Delicate Balance Between Recovery and Recession Risk

Germany’s July PMI figures reflect a fragile yet ongoing recovery, with services stabilizing and manufacturing showing early signs of resilience despite staying in contraction territory. While the composite index remains just above breakeven, the trajectory is far from robust, and sentiment remains cautious across sectors.

For now, the economy appears to be threading a narrow path between stagnation and growth, with momentum likely to hinge on broader developments such as the outcome of U.S. trade negotiations, further ECB rate decisions, and the implementation of fiscal stimulus at the national level. The coming months will be critical in determining whether this fragile recovery solidifies or slips back toward contraction.

Source: Reuters

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Gerik

Economic

Tech leaders defy trade headwinds with strong results and forward guidance

Some of the world’s top technology firms have emerged as clear outperformers amid the ongoing uncertainty surrounding US trade policy. Alphabet, SK Hynix, and Infosys all posted earnings that beat market expectations and issued forward guidance signaling confidence in future performance.

SK Hynix, a critical supplier to Nvidia, reported record quarterly profit fueled by strong demand for AI chips and a strategic buildup of inventories by customers anticipating additional US tariffs. Meanwhile, Infosys, a key Indian IT services firm, raised the lower bound of its revenue growth forecast to 1%–3%, reflecting steady business demand despite regulatory and currency uncertainties.

Alphabet also stood out, not only with better-than-expected earnings but by signaling increased investment plans, reinforcing long-term bullish sentiment in cloud infrastructure and AI development. These companies' proactive stance boosting capital expenditures and preparing for supply chain volatility suggests a degree of resilience rooted in innovation and forward-looking capacity management.

Global tariff pressure weighs heavily on industrial sectors

While tech firms shine, the broader Q2 earnings season has revealed significant pain among traditional manufacturers, particularly in automotive, aerospace, and pharmaceutical industries. Between July 16 and 22, companies collectively reported up to $7.8 billion in full-year losses, with US tariffs cited as a primary driver.

Hyundai reported a 16% drop in Q2 operating profit, attributing 828 billion won (approximately $606.5 million) in losses to tariffs. General Motors echoed this narrative, with tariffs cutting $1.1 billion from its earnings. Tesla also highlighted pressure, with CEO Elon Musk warning of “rough quarters ahead” due to reduced government support for electric vehicles, following its worst sales performance in over a decade.

These cases underscore the asymmetric impact of trade policy. Industries with high fixed costs, complex supply chains, and export exposure like automaking and aerospace are struggling to absorb the price distortion caused by sudden tariff changes.

Consumer brands show resilience through strategic inventory and demand

Swiss pharmaceutical giant Roche and global food and beverage leader Nestlé offered more positive signals. Roche beat H1 profit expectations and confirmed it had increased inventories in the US to hedge against the threat of incoming tariffs, a strategy that may reduce initial disruption. CEO Thomas Schinecker emphasized ongoing investment in local US production facilities, possibly to strengthen their case for exemption or leniency.

Nestlé posted solid organic sales growth and maintained its 2025 outlook, a sign that consumer staples may be better positioned to weather the volatility. These firms have pricing power, diversified supply chains, and more flexible cost structures, enabling them to pass on some cost increases without significantly disrupting margins.

High-stakes diplomacy ahead of August deadline

The underlying cause of this market bifurcation global trade tension remains unresolved. The recent US-Japan trade agreement, which includes reduced tariffs on auto imports, briefly boosted market sentiment and raised hopes for similar deals with the European Union, South Korea, Brazil, and Canada before the revised August 1 deadline.

However, uncertainty persists. South Korea’s finance ministry announced that its scheduled trade talks with US Treasury Secretary Scott Bessent were postponed, raising doubts over its ability to secure exemptions for key industries. Meanwhile, the EU is considering a 15% baseline tariff with conditional exemptions, and is entering a summit with China while bracing for pressure from both Beijing and Washington.

The overlapping negotiations, shifting deadlines, and lack of coherent global coordination all add complexity to corporate forecasting and capital allocation, making long-term planning increasingly difficult for multinationals.

Sectoral divergence widens as trade deadline nears

Q2 2025 earnings illustrate a clear divergence between technology and industrial sectors. While innovative, asset-light firms such as Alphabet and SK Hynix continue to expand in spite of trade friction, capital-intensive manufacturers like Hyundai and GM are absorbing immediate and significant losses.

Consumer staples and healthcare companies, aided by inventory hedging and diversified footprints, provide a degree of defensive stability. With major economies still rushing to conclude trade agreements before the looming August 1 deadline, the landscape remains fluid. For now, only the most adaptable companies those with foresight, capital strength, and geopolitical agility are positioned to thrive in this era of unpredictable policy and persistent macroeconomic tension.

Source: Reuters

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Gerik

Economic

Automakers face mounting structural headwinds

The European auto market recorded a sharp decline in new vehicle registrations in June, down 5.1% year-on-year across the EU, UK, and EFTA regions, according to data from the European Automobile Manufacturers Association (ACEA). This downturn signals the growing burden faced by traditional automakers navigating a challenging landscape of elevated tariffs, regulatory pressure, and global competition.

Volkswagen Group’s sales dropped 6.1%, while Renault and Hyundai saw even steeper declines of 12.3% and 8.7%, respectively. Stellantis reported a marginal dip of 0.6%. Tesla, meanwhile, recorded a 22.9% drop in deliveries, its sixth straight month of shrinking market share in Europe. The company’s share of the regional market contracted to 2.8%, from 3.4% a year earlier.

This widespread contraction highlights a convergence of challenges affecting legacy and disruptive players alike. Most notably, the 25% US tariff on European vehicle imports announced earlier this year has eroded margins and demand for key export segments, particularly among German manufacturers. Simultaneously, rising competition from Chinese automakers like BYD has intensified pricing pressures, especially in the battery electric vehicle (BEV) segment.

Electric vehicle adoption grows, but incumbents lag

While overall auto sales in the EU fell 7.3% in June, electrified vehicle registrations surged. Battery electric vehicles rose 7.8%, hybrids jumped 41.6%, and plug-in hybrids increased 6.1%. Together, these vehicle types accounted for nearly 60% of EU passenger car sales up sharply from 50% a year ago.

Despite this growth, traditional automakers appear slow to capture demand in this segment. Newer brands and Chinese entrants are aggressively expanding in the EV market, undercutting incumbents on both price and product offerings. According to Ben Nelmes of New AutoMotive, established carmakers have failed to respond quickly enough to consumer demand for cleaner, affordable vehicles, creating an opening for challengers.

Notably, brands not included in ACEA data such as BYD and other Chinese manufacturers doubled their combined market share to 4.5%, reflecting growing traction among European consumers seeking lower-cost EV alternatives.

Regional performance diverges amid economic pressures

National-level sales trends revealed uneven performance across Europe. Germany, France, and Italy saw significant declines of 13.8%, 6.7%, and 17.4%, respectively. In contrast, Britain recorded a 6.7% rise in sales, and Spain posted an impressive 15.2% increase.

These divergent outcomes are partly a function of domestic policy differences, including varying EV subsidies, consumer confidence levels, and industrial exposure to export markets. Germany’s sharp decline is particularly notable given its heavy reliance on automotive exports and vulnerability to US and Chinese trade actions.

Industry disruption accelerates as incumbents struggle to adapt

The June car sales slump across Europe underscores the growing mismatch between legacy automakers’ strategies and the rapidly evolving preferences of consumers. While EV adoption is clearly rising, incumbents are failing to lead this transition, losing share to faster, more agile entrants. At the same time, geopolitical frictions, especially the US tariff regime, are further distorting demand and squeezing profitability.

Unless Europe’s major automakers accelerate innovation and adapt more decisively to structural shifts in global trade and vehicle technology, they risk ceding more ground to foreign competition both on the continent and abroad. The next six months, shaped by trade negotiations and EV market dynamics, will be critical in determining whether they can regain momentum or continue to lag behind.

Source: Reuters

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Glendon

Economic

Forex

Britain’s private sector lost momentum in July as the fallout from the Labour government’s first budget and a febrile global backdrop prompted firms to cut jobs and new orders, according to a closely watched survey.

S&P Global’s purchasing managers’ index slipped to 51 in July from the nine-month high of 52 the previous month. It was slightly worse than the 51.8 reading expected by economists surveyed by Bloomberg.

While the index held above the 50 threshold separating growth and contraction, S&P said July’s survey implied a tepid quarterly growth rate of just 0.1%.

It showed the UK economy struggling to shake off the twin hits of Labour’s tax-raising budget and a volatile geopolitical environment caused by Donald Trump’s US tariffs. The survey chimed with recent official data suggesting the economy slowed sharply from the bumper 0.7% growth seen in the first quarter.

“The sluggish output growth reported in July reflected headwinds of deteriorating order books, subdued business confidence and rising costs,” said Chris Williamson, chief business economist at S&P Global Market Intelligence. He said these were “widely linked to the ongoing impact of the policy changes announced in last autumn’s budget and the broader destabilising effect of geopolitical uncertainty.”

The manufacturing output index improved to a still-stagnant score of 50, suggesting an eight-month contraction in production ended. However, the UK’s powerhouse services sector suffered a slowdown to reading of 51.2, down from 52.8.

Firms cut employment at the fastest pace in five months after being hit in April by a £26 billion ($35 billion) increase in payroll taxes and a hike in the minimum wage. S&P said this was being done through a mixture of hiring freezes and redundancies.

New orders declined after picking up in June, while export sales fell for a ninth straight month as firms delay shipments and investment decisions amid the White House’s volatile tariff announcements. Input price inflation rose, fueled by April’s jump in employment costs.