Quiet week ahead for the UK data-wise, so Sterling will be moved by events elsewhere..
| GBP
| The Pound lost 1.5% immediately after touching a 3-year high against the Dollar this time last week. This goes to show the pair had moved into overbought territory and so breaking back above this point in the weeks/months ahead will take some doing.
Many analysts we follow expect to see further gains as the year goes on, but i'm not so sure. I think if you can exchange above £-$1.30 (£-$1.26 has been the average rate over the last 3-years) do it, it's favourable and you have more to lose than to gain for me personally.
GBP v EUR has (thankfully for most of you reading this) recovered 2% in just 2-weeks. Things were looking a bit 'hairy' for a minute there, but seeing the mid-market rate go below £-1.15 was not a fair reflection whatsoever and so a pull-back was inevitable.
The Pound will be looking to consolidate as the month comes to a close and the UK offers nothing of note economically.
EUR Almost all forecasts see a bullish Euro in 2025. We are in that camp too, but how much further value can it make from what it has already achieved is the question we are struggling to answer.
EUR v USD has risen from the dead to hit a 3-and-a-half year high and EUR v GBP hit a 15-month high 2-weeks ago. I think overall the Euro will have a really great year, but I think most of those gains have already taken place until the ECB stop its rate cutting cycle.
USD Financial markets remain firmly in the investor 'risk on, risk off' cycle. This is nothing new, we have been anchored this way for the last 4-years with covid news, inflation & interest rates. However, because no-one really knows what Trump is going to say or do next and he doesn't say or do anything by halves, it makes for an impossible to predict environment.
Uncertainty means chaos and investors retreat to what is safe (risk-off). Stability on the other hand allows for creativity and investors are therefore willing to make riskier trades (risk-on). This is why we have seen financial markets in turmoil since the Trump tariffs were announced (unpredictability kills creativity) and we will continue to do so until all negotiations have taken place and new trade deals have been agreed. |
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