Strong U.S. housing data and weak data across the pond are driving the GBP/USD and EUR/USD pairs lower Tuesday against a backdrop of more trade uncertainty.

U.S. housing starts surprise

New construction data for March came out higher than expected, despite the colder weather during the month. The data is helping the dollar make a run against the euro and pound.

Housing starts came out at 1.319 million for the month of March compared to a 1.262 million estimate, and higher than February’s 1.295 million. Building permits also came out higher than expected month over month at 1.354 million. Estimates were closer to 1.323 million for March.

The EUR/USD pair fell on the news, trading around 1.234 after spiking above 1.24 in the early morning hours Tuesday. The euro was already slipping after the German ZEW sentiment survey fell more than expected to -8.4 for April, compared to consensus view of -1.0.

For the EUR/USD pair the next possible movers are industrial data from the U.S. and three separate speeches by members of the Federal Reserve throughout the day.

U.K. wage data disappoints

The U.S. housing data also kicked the pound while it was already down due to lackluster wage data.

Despite the fact that U.K. wage growth is increasing at its fastest pace since 2015 and unemployment is down to its lowest rate since 1975, the wage data for March missed expectations, causing the pound to take a hit.

Average earnings including bonuses for the three months ending in February held steady at 2.8% compared to the 3.0% expected. Unemployment dropped from 4.3% to 4.2% for the three months ending in  February.

GBP/USD slipped from the highs of 1.436 to 1.432 after the wage data was released overnight.

As it started to tick back up, the U.S. housing data brought it back down to 1.432 levels.

The wage data is still good news for U.K. households and shows that incomes are catching up with prices. The release also confirms the likelihood of a rate hike at the Bank of England’s May meeting.

Trade tensions get twisted

The saga for trade tensions between the U.S. and the rest of the world got a little more complicated yesterday when President Trump took to Twitter to accuse China and Russia of devaluing their own currency.

This claim is in stark contrast from the U.S. Treasury Department, which said that no major trade partner is a currency manipulator. Reports have circulated that China was considering a yuan devaluation as a tool to combat trade.

Trump’s tweet shows a trend by the Trump administration and other countries to involve currency policy in trade disparities.

Overnight, China announced that it would limit trade restrictions on the auto industry, removing ownership caps. German carmaker shares rose on the news. China also announced anti-dumping tariff on U.S. sorghum imports, which increased fears that soybeans will be next.

The USD/JPY pair dipped below 107 for the first time since Thursday due to the uncertain environment. Investors were looking to the safe-haven yen due to trade and a growing drop in the approval rating for Japanese Prime Minister Shinzo Abe.

Abe is in Florida today visiting with President Trump at his Mar-a-Lago estate. The two are expected to discuss trade and North Korea.

USD/JPY is back up around 107.1 on the better-than-expected U.S. housing starts data.