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A tough start to 2025 for sterling
Following a disastrous Wednesday for the pound, which saw the currency hit a 14-month low against the dollar, GBP began to rally as market turmoil eased. The dollar continues to lead on both sterling and the euro.
The deterioration of the pound followed Wednesday’s news that 10-year borrowing rates had hit the highest price since the 2008 financial crash. The increased costs threatened to force Chancellor Rachel Reeves into either increased taxes, cuts to public spending or finding a way to break her own government borrowing rules. However, yesterday’s fresh commitment from the UK Treasury to its fiscal rules and confirmation that the instability didn’t call for a government intervention eased the markets.
The pound may face fresh losses if US payroll and unemployment figures published later today are stronger than predicted. The unemployment rate was forecast to remain steady at 4.2%, but Tuesday saw the US reveal job openings had increased to 8.1m, exceeding initial expectations of 7.7m, so today’s data may upset predictions.
While the euro gained against the pound on Wednesday, weak retail sales data for the eurozone countries saw sterling regain lost ground over the course of Thursday. Forecast to increase by 0.4%, eurozone retail sales increased by just 0.1%.
With no major data releases for the UK or eurozone scheduled for today, GBP and EUR are at the mercy of the US Non Farm Payroll and unemployment rate releases due to be published this afternoon.
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: Markets view big data week ahead
After significant losses against USD and EUR following debt costs reaching a new high, GBP stabilised on Thursday. Next week we will see the first high-level data of the year from the UK, with inflation on Wednesday and GDP on Thursday.
GBP/USD past year
EUR: Euro remains steady
The euro made small losses against the dollar and only partially fended off the pound, losing a fifth of the gains it made on Wednesday. Weak retail sales put it in a poor position ahead of US data due to be published later today.
EUR/USD past year
USD: Dollar poised for strong close to the week
The dollar lost some of the gains it made on the pound earlier this week but held steady against the euro. Following better-than-forecast jobs data earlier this week, the dollar has potential to upset predictions again with unemployment rate and Non Farm Payroll data later today.
USD/GBP past year
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