020 7898 0500
GBP/EUR reached its highest level of 2025 yesterday as the euro struggled on the global stage.
Sterling navigated an alarming inflation report to reach its highest mark against the euro since the end of 2024. A volatile trading session for GBP/USD pushed the pound down by the best part of half a cent as markets awaited the latest minutes from the Federal Reserve’s main committee.
Those minutes painted a picture of slower interest rate cuts. Officials agreed that they required evidence of “further progress on inflation” before they cut interest rates. The US dollar was stable after the publication but stock markets shed a little value into the overnight Asian session.
London’s house prices did not increase across 2024, according to new figures from the Office for National Statistics (ONS). Those figures were in stark contrast to prices across the rest of Britain, which climbed by average rate of 4.6% in the twelve months to December.
Some mixed data from the American construction industry arrived yesterday. On the one hand, a significantly higher than expected result in the building permit study pointed to impressive future growth. However, that was countered by a slump in housing starts – the physical, shovel-in-ground part of the equation.
With just over a month to go until the chancellor’s spring statement, rumours are swirling that Rachel Reeves could be planning on announcing tax increases, notably to savings pots like ISAs. Senior executives from asset managers yesterday urged her to scrap the tax-free cash ISA scheme to promote more investment in the UK stock market.
The Donald Trump soap opera rumbled on as the US president completed his country’s remarkable diplomatic about-face to blame Ukraine for the war. Ukraine’s president Volodymyr Zelenskyy accused Trump of living in a “disinformation bubble” as tensions continued to escalate.
Make sure any upcoming transactions are protected against the risks of sudden market movements. Secure a fixed exchange rate now with a forward contract; call your account manager on 020 3918 7255 to get started.
GBP: Pound looks to Reeves after inflation swell
Higher inflation had a mixed impact on the pound but gives Britain’s chancellor a far larger headache. Sterling markets are now keen to discover what Reeves will do next to address the UK’s funding shortfall. Higher taxes and departmental cuts seem inevitable but her decisions will be a huge player in the pound’s next act.
GBP/USD: the past year
EUR: Down across the globe
Almost all global currencies trended higher against the euro on Wednesday, from the Japanese yen to the Australian dollar. That could change over the weekend as the outcome of the German elections have the power to radically improve the euro’s trajectory.
GBP/EUR: the past year
USD: Dollar flexes its muscles
The US dollar demonstrated its power on Wednesday, swiftly knocking down some of the pound and euro’s recent gains. Much of that was sparked by the assumption of slower interest rate cuts from the Federal Reserve but it could have been even better were it not for rumours of some trade clemency for China.
EUR/USD: the past year
For more on currencies and currency risk management strategies, please get in touch with your Smart Currency Business account manager on 020 7898 0500 or your Private Client Account Manager on 020 7898 0541.
