Monthly Archives: December 2024

With the New Year holiday limiting economic data releases, market movements are expected to remain flat, and volatility is likely to be modest. However, ongoing developments in the eurozone, UK, and US are keeping investors on alert.

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Euro Declines as Interest Rate Concerns Mount

The euro weakened on Friday against major rivals, marking its fourth consecutive weekly decline. This drop follows concerns over a widening US-eurozone interest rate differential, compounded by cautious remarks from ECB President Christine Lagarde.

Lagarde’s comments have increased the probability of a 0.25% ECB rate hike in January, rising from 55% to 65%, signalling a more cautious approach to monetary policy in the eurozone.

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Pound Under Pressure Against the Dollar

The GBP/USD currency pair continues to struggle amid:

• Flat UK GDP growth in Q3.
• Mixed retail sales data.
• Rising public sector borrowing.

These factors, coupled with a strong US dollar, have placed the pound under sustained negative pressure. Without significant changes in economic data or market sentiment, this trend is expected to persist.

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Key Takeaway for Businesses

With the euro’s decline and the pound facing headwinds, businesses involved in international trade should stay vigilant. Modest volatility may still present opportunities to hedge currency risks or lock in favourable rates.

Speak to Qumoney’s experts today to explore strategies tailored to your needs, ensuring your business is prepared as markets evolve into 2025.

With the Christmas period upon us, this week’s economic calendar is light, leading to flat market movements and subdued volatility. However, last week’s developments in monetary policy and currency trends still present key opportunities for businesses and investors.

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Pound Recovers After BoE Decision

Last week, the Bank of England’s monetary policy decision created initial headwinds for the pound. A split in the Monetary Policy Committee (MPC)—with 3 out of 9 members voting to cut interest rates—increased expectations of a potential rate cut at the next meeting.

Despite this, the lack of significant economic data this week has allowed the pound to regain ground against both the euro and the dollar, providing a favourable window for businesses to capitalise on its strength.

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Why Now is a Great Time to Hedge

The pound’s recovery offers a timely opportunity for forward buying. By locking in a competitive rate now, businesses can:

• Protect themselves from adverse market movements as we approach 2025.
• Secure their financial position amid ongoing uncertainties.

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Take Action Before Christmas

With markets stabilising in the lead-up to the holiday season, now is the time to consider your currency strategy for the new year.

Contact Qumoney’s experts today to discuss forward buying and hedging opportunities. Protect your business from volatility and secure peace of mind as we head into 2025.

Today’s economic updates reveal challenging conditions for the UK economy, as retail sales and currency movements highlight the impact of ongoing uncertainties. Here’s a closer look at the latest developments.

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UK Retail Sales: A Decline in Consumer Spending

This morning’s release of the UK’s Retail Sales data showed a month-on-month decline of 0.3%, a stark drop from the 0.5% growth recorded last month. The slowdown reflects mounting pressure on the retail sector, with consumer spending hampered by economic uncertainties.

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Pound Weakens After Interest Rate Decision

The pound has faced significant pressure following yesterday’s Bank of England interest rate decision. The main driver behind its decline was the unexpected split in the Monetary Policy Committee (MPC), where three members voted to cut rates.

This divergence has amplified concerns about the UK’s economic outlook and added volatility to the currency markets:

• Against the dollar, the pound has fallen over 100 points, with the dollar’s strength underpinned by robust US economic performance.
• Against the euro, sterling has shown relative resilience, as ongoing Eurozone struggles weigh on the euro.

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Uncertainty Over 2025 Monetary Policy

The Bank of England’s indication of four rate cuts in 2025 has been met with scepticism. Labour’s recent budget, expected to fuel higher inflation, casts doubt on the feasibility of such projections. This uncertainty has left markets in a state of flux, awaiting clearer signals on future monetary policy.

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US Data in Focus

Later today, the US will release its Personal Income data, with core price growth forecasted at 0.2%, slightly down from last month’s 0.3%. This release could shape market sentiment and influence further currency movements, particularly for the dollar.

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How Could This Impact Your Business?

The combination of weaker UK retail sales, volatile exchange rates, and shifting monetary policies highlights the importance of staying agile in uncertain markets. For businesses with international exposure, understanding these dynamics is critical to managing risks and capitalising on opportunities.

Speak to Qumoney’s experts today for bespoke strategies to navigate currency fluctuations and protect your bottom line.

Global markets are reacting to a series of critical updates, including the Federal Reserve’s latest interest rate cut and upcoming decisions from the Bank of England. Here’s what you need to know:

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Federal Reserve Cuts Interest Rates

Last night, the Federal Reserve announced a 0.25% rate cut, bringing its benchmark rate down to a range of 4.25%–4.50%. While this is the final rate cut of the year, the Fed signalled it plans fewer rate cuts in 2025 as it continues to prioritise battling inflation.

The news had an immediate impact on the markets:

• Stock markets fell sharply in response to the Fed’s ‘hawkish’ stance.
• The US dollar strengthened, bolstered by the central bank’s commitment to tighter monetary policy.

This marks the last major rate decision before Donald Trump assumes the presidency in January, adding another layer of interest to the Fed’s outlook.

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Bank of England Decision Looms

Today, attention turns to the Bank of England, which will vote on whether to hold or cut interest rates. While no change in policy is widely expected, the market’s focus will be on post-decision commentary.

Although there will be no official press conference, Governor Andrew Bailey’s interview later in the day will be closely watched. Markets are eager for clues about the central bank’s strategy heading into 2025, especially in light of the UK’s ongoing inflation challenges.

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Euro Under Pressure

The euro continues to struggle, falling against both the pound and the dollar. This decline follows months of disappointing economic and political data from the Eurozone. With sentiment deteriorating, the euro faces increasing pressure in the global currency market.

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How Could This Impact Your Business?

Interest rate decisions and currency fluctuations create opportunities and risks for businesses engaged in international trade or investments. With the dollar gaining strength and the euro under pressure, navigating these shifts requires strategic planning.

Reach out to Qumoney’s experts today for tailored advice on managing currency risks and making the most of market volatility.

Today’s financial headlines are dominated by rising inflation and pivotal interest rate decisions across the globe. Here’s a quick breakdown of the latest developments and what they could mean for businesses and investors.

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UK Inflation Rises Above Target

The Office for National Statistics (ONS) revealed that UK CPI inflation climbed to 2.6% in November, surpassing the Bank of England’s 2% target. This increase aligns with expectations following stronger-than-anticipated wage growth data released yesterday. Rising wages are fuelling demand in the UK economy, keeping inflation elevated and placing additional pressure on the Bank of England’s next move.

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Eurozone Inflation in Focus

Later this morning, the Eurozone is set to release its CPI inflation figures, with a forecasted increase of 0.3%. This would bring the headline rate to 2.3%, pushing it above the European Central Bank’s (ECB) 2% target. Investors will be watching closely as higher inflation across the region could influence ECB policy in the months ahead.

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Federal Reserve to Cut Rates

The day will conclude with a key announcement from the Federal Reserve, which is expected to lower its headline interest rate to the 4.25%-4.50% range. This decision is good news for US homeowners, as it will likely lead to lower monthly mortgage payments. However, all eyes will be on Jerome Powell’s comments, as investors look for any signals about potential rate cuts in 2025.

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What’s Next for the Bank of England?

Looking ahead to tomorrow, the Bank of England is expected to keep interest rates unchanged following recent economic shifts, including rebounding wage growth and rising inflation. The GBP/EUR exchange rate is currently trading at a key resistance level. If the Bank’s decision supports market confidence, we could see the Pound strengthen further.

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How Could This Impact Your Business?

Market volatility is likely to remain high as inflation and interest rate decisions drive investor sentiment. Whether you’re looking to hedge against currency risks or take advantage of favourable exchange rates, staying informed is crucial.

Contact Qumoney’s experts today for tailored insights and strategies to help your business navigate these developments and capitalise on market opportunities.

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