Published by Global Banking & Finance Review®
Posted on February 3, 2025
2 min readLast updated: January 26, 2026
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British stocks dropped as Trump paused tariffs on Mexico. FTSE 100 and FTSE 250 fell amid global trade war fears, with BoE expected to cut rates.
By Pranav Kashyap
(Reuters) -Britain's benchmark FTSE 100 dropped on Monday following its best monthly performance in over two years as investors fretted that U.S. tariffs could fuel a global trade war.
The indexes, however, finished well off their lows after U.S. President Donald Trump paused new tariffs on Mexico for one month, hours before sweeping levies on Mexico, China and Canada were set to take effect.
The FTSE 100 was down 1.1%, after closing January with a 6.1% gain.
The domestically-focussed mid-cap FTSE 250 lost 1.1% on the day.
British stocks joined a global selloff sparked by fears that Trump's tariffs on Canada, Mexico and China mark an opening salvo in a trade war that could curb economic growth internationally. [MKTS/GLOB]
However, Trump said that although Britain was "out of line" when it came to trade he thought it may be able to avoid tariffs and said they would "definitely happen" with the European Union.
Europe's benchmark STOXX 600 was down 0.9%, while the S&P 500 slipped over 0.6%. [.EU][.N]
Most FTSE 250 sub-sectors fell with tariff-sensitive sectors such as automobiles down 2.4% and consumer-focussed sectors, including beverages sliding 1.8%.
Safe-haven assets were in demand, with yields on European and gilts falling. [EUR/GVD]
On the economic front, British factories reported another tough month in January as output, new orders and employment all fell, PMI data showed.
BOE-BANKS-e57d1808-2900-42bd-832f-d8f2baa8f262>The Bank of England meets on Thursday and is expected to cut interest rates by 25 basis points.
Investors added to bets on BoE rate cuts, pricing in 81 basis points of reductions by the end of the year, compared with 75 bps - which represented a full pricing of three quarter-point rate cuts - on Friday.
(Reporting by Pranav Kashyap and Medha Singh in Bangalore; Editing by Sonia Cheema, William Maclean)
British stocks dropped due to concerns that U.S. tariffs could trigger a global trade war, impacting economic growth.
President Trump’s decision to pause new tariffs on Mexico for one month helped British stocks recover slightly from their lows.
The Bank of England is expected to cut interest rates by 25 basis points during its upcoming meeting, as investors anticipate further reductions.
Tariff-sensitive sectors like automobiles and consumer-focused sectors, including beverages, experienced declines of 2.4% and 1.8%, respectively.
British factories reported a tough month in January, with declines in output, new orders, and employment, according to PMI data.
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