BUZZ-COMMENT-Tariff noise flips focus to payrolls, BoE for clarity

Feb 4 (Reuters) - Whipsaw is the best way to describe the price action in markets over the last 24 hours amid the tariff-on, tariff-off backdrop, which in turn, will likely lower conviction with traders reluctant to chase sizeable moves.

U.S. President Donald Trump agreed to delay 25% tariffs on Canada and Mexico by a month, while 10% tariffs on China took effect this morning.

Outside of U.S. trade policy updates, there is a slew of key Tier 1 data releases, namely the U.S. jobs report and the Bank of England policy. As such, while the tariff-related headlines will continue to inject a bout of volatility, upcoming data releases and central bank decisions will perhaps establish a clearer sense of direction.

The Bank of England is expected to cut the bank rate this week, and, with this fully priced in, the focus will be on the guidance, which in light of the UK's growth challenges, risks leaning dovish. Consequently, after the round-trip move in EUR/GBP to retest 0.83, we may begin to drift higher leading into the decision with the cross appearing to have found a short-term floor.

For the dollar, since the DeepSeek shock, the U.S. exceptionalism trade has been called into question. This narrative could take a further hit, should the payrolls report surprises on the downside. But with tariff uncertainty likely to remain, a pullback in the dollar is likely to be a shallow one, suggesting a period of consolidation in the near-term.

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