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The US dollar began 2025 with a streak of wins against key rivals.
A scorching start to 2025 for the US dollar saw it record a daily advance of over 1% against both the pound and the euro. By yesterday afternoon, GBP/USD had fallen to its lowest level in eight months.
Things were quiet in European markets, although this morning’s German unemployment figures are the first real direction the euro will have had since before the Christmas break.
The US dollar’s strength came as the result of some early-year caution. Safe-haven trades dominated currency markets yesterday and pushed USD to daily gains over the Canadian dollar and the Japanese yen. This trend was also positive for the price of gold. As of Thursday afternoon, one troy ounce would set you back more than $2,650 on the open market.
A rough first trading day of the new year isn’t exactly a first for sterling. According to Deutsche Bank, GBP/USD has had a negative opening day in eleven of the last twelve years stretching back to 2014. EUR/USD has also struggled historically, albeit with a slightly better record of ten falls to two increases.
December’s Nationwide house price study pointed to more growth in UK house prices. The annualised growth rate of 4.7% last month marked the biggest rise in prices for over two years.
British homeowners will get a chance for a deeper look at the housing market with mortgage lending numbers out later this morning.
Yesterday’s final figures for eurozone manufacturing in December meanwhile came in roughly as expected and had little effect on the euro. Next week will likely see larger moves as the euro faces a packed schedule of data.
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GBP: Pound looks to start again
Sterling resumed its Sisyphean task of pushing back against a dominant US dollar yesterday. While initially unsuccessful, the pound proved last year it can pack a punch should the US dollar falter.
GBP/USD: the past year
EUR: Quiet against the pound
GBP/EUR was a much less active battleground than against the US dollar yesterday. Without much in the way of meaningful data, markets allowed themselves to be dictated by risk sentiment and economic narratives.
GBP/EUR: the past year
USD: Eyeing manufacturing
After sweeping all before it to end 2024, the US dollar began the fresh year with its momentum intact. In a release that could spell trouble ahead, today’s manufacturing PMI figures are projected to show the ninth straight month of sector-wide contraction.
EUR/USD: the past year
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