Category Archives: FX News

Market Update: UK Growth Slows as Stagflation Concerns Rise
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Market Update: UK Growth Slows as Stagflation Concerns Rise

The latest economic data highlights challenges for the UK economy, with weaker-than-expected growth figures and signs of underlying economic weakness. Meanwhile, attention shifts to the US data releases later today.

UK Economy Grows by Just 0.1% in November

The Office for National Statistics (ONS) reported this morning that the UK economy grew by a modest 0.1% month-on-month in November, missing the forecasted 0.2%.

Additionally, industrial and manufacturing output showed a month-on-month decline, indicating underlying economic fragility and further challenges to growth. These figures have raised concerns about the UK’s economic outlook.

Stagflation Fears Weigh on the Pound

The weaker economic data has led to concerns about stagflation, a period of low growth and high inflation. These conditions are increasing speculation that the Bank of England may opt to reduce interest rates at their next monetary policy meeting to stimulate growth.

Following the release of this data, the pound weakened against both the euro and the dollar, reflecting investor unease over the UK’s economic prospects.

US Data in Focus

This afternoon, the market will turn its attention to US economic data, including:

  • Unemployment claims: Expected to rise to 210k, providing a snapshot of the US labour market.
  • Retail sales for December: Forecasted to increase by 0.6%, offering insights into US consumer spending trends.

These releases could influence the dollar’s performance and provide further clarity on the strength of the US economy.

How Could This Impact Your Business?

The combination of weaker UK data, pound depreciation, and upcoming US releases highlights the importance of staying prepared for market volatility. Businesses with exposure to GBP/USD or GBP/EUR should consider strategies to hedge currency risks and take advantage of favourable movements.

Contact Qumoney’s experts today for personalised advice on navigating these market conditions and protecting your business.

Market Update: PPI Data and UK Economic Focus Dominate the Week
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Market Update: PPI Data and UK Economic Focus Dominate the Week

The week continues with a relatively quiet start, but key economic data and political developments are set to influence markets in the coming days. Here’s what to watch.

US Producer Price Index (PPI) in Focus

This afternoon, the US Producer Price Index (PPI) is due for release, with forecasts predicting a year-on-year rise to 3.4%, up from 3%. A stronger-than-expected reading could bolster the US dollar further, as it would reflect increasing inflationary pressures, potentially shaping future Federal Reserve policy.

Key Political Week for the UK

In the UK, this is a pivotal week for Chancellor of the Exchequer Rachel Reeves, as she prepares to face scrutiny during Prime Minister’s Questions in Parliament tomorrow. The debate will likely focus on government debt and plans to address it, with options including:

  • Tax increases.
  • Reduced government spending.

Labour leader Keir Starmer has hinted at a determined approach to cutting public expenditure, adding political weight to the week’s economic discussions.

UK Economic Data: CPI, GDP, and Retail Sales

On the data front, the UK Consumer Price Index (CPI) is scheduled for release tomorrow morning, with forecasts suggesting inflation will hold steady at 2.6%. Later this week, additional key metrics, including Gross Domestic Product (GDP) figures and Retail Sales, will provide further insights into the UK economy’s health.

Currency Markets: Pound’s Mixed Performance

The pound remains under pressure, continuing its downward trend against major currencies. However, there are early signs of recovery today, with the pound gaining:

  • 40 points against the dollar.
  • 10 points against the euro.

This mixed performance reflects ongoing volatility in the foreign exchange markets, as traders assess political and economic developments.

How Could This Impact Your Business?

With significant data releases and political events on the horizon, currency markets are poised for potential volatility. Businesses should take proactive measures to hedge against risks and optimise their international transactions.

Contact Qumoney’s experts today for bespoke strategies to navigate these uncertain times and capitalise on market opportunities.

Market Update: UK Inflation Eases, Boosting the Pound
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Market Update: UK Inflation Eases, Boosting the Pound

The latest UK inflation figures have surprised markets, coming in lower than expected and offering relief amid ongoing economic pressures. Here’s what you need to know.

UK Inflation Falls to 3.4%

This morning’s data revealed that UK inflation fell to 3.4%, below the forecasted 3.8%, surprising economists with a 0.4% drop. This unexpected easing of inflation:

  • Alleviates some of the pressure on Chancellor Rachel Reeves, as she navigates a challenging economic landscape and a bond market sell-off.
  • Has already triggered a jump in the pound, with gains against both the euro and the dollar following the release.

Upcoming Key Data Releases

Today’s focus now shifts to:

  • German Growth Figures: Expected later this morning, providing insights into the health of Europe’s largest economy.
  • EU Industrial Production: Also due this morning, potentially influencing euro performance.
  • US CPI Data: This afternoon, the US inflation figures will be closely monitored, particularly after a series of strong economic results in recent weeks.

How Could This Impact Your Business?

The pound’s upward movement presents an opportunity for businesses dealing in GBP/EUR or GBP/USD transactions to secure favourable rates. Meanwhile, forthcoming data from the US and EU could create additional market volatility. Staying informed is key to managing currency risks and maximising opportunities.

Contact Qumoney’s experts today for tailored strategies to protect your business and capitalise on market shifts.

Inflation reports, GBP/USD at 14-month low, euro slides to parity
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Market Outlook: Inflation Reports to Set the Tone for Currency Markets

This week, all eyes are on inflation reports from the UK, US, and Eurozone, which are expected to play a critical role in shaping currency markets. As inflation remains a key driver of central bank policies, these figures will provide crucial insights into how policymakers may respond to ongoing economic challenges.

Last Week’s Highlights: USD Strength and EUR/USD Weakness

  • GBP/USD: The pair hit a 14-month low, driven by stronger-than-expected US labour market data.
    • US unemployment rate dropped to 4.1%, outperforming the forecast of 4.2%.
    • Non-farm payrolls surged to 256k, well above the expected 160k, showcasing a robust US job market and an overall strengthening economy.
  • EUR/USD: The euro continues to slide toward parity, trading at its lowest level since November 2022.
    • The euro’s decline has been fuelled by:
      • Rumoured Trump tariffs.
      • Rising concerns over the Eurozone economy.
      • A growing divergence between the Federal Reserve’s hawkish stance and the European Central Bank’s cautious approach to interest rates.

Pound Sterling Under Pressure

  • The pound remains the worst-performing G10 currency this year, reflecting a combination of weak economic data and market sentiment.
  • Markets are pinning hopes on this week’s UK inflation data to provide some relief and bolster GBP performance.

What to Watch This Week

The inflation figures from the UK, US, and Eurozone will be pivotal in determining how currencies move this week. A higher-than-expected inflation reading could prompt further rate hikes or influence policy changes, driving volatility across major currency pairs.

How Could This Impact Your Business?

Inflation-driven market volatility presents risks and opportunities for businesses with international exposure. Understanding these dynamics is critical for managing currency risks and securing favourable exchange rates.

Contact Qumoney’s experts today for tailored advice to help you navigate this volatile market and protect your financial position.

Market Update: Narrow Trading Ranges and Focus on US Labour Data
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Market Update: Narrow Trading Ranges and Focus on US Labour Data

Currency markets traded within narrow ranges yesterday, as limited US trading activity and a quiet overseas data schedule subdued price movements. Here’s the latest on what’s driving the markets and what to expect.

Sterling on the Defensive as Dollar Edges Higher

Among yesterday’s modest movements:

  • Sterling remained under pressure, reflecting ongoing concerns about the UK’s economic outlook.
  • The US dollar rose slightly, supported by its status as a safe haven amid a lack of major market catalysts.

US Labour Market Data in Focus

Today, the market spotlight turns to the December US labour market data, which could introduce event risk for the dollar. Recent months have shown signs of a slowing labour market, though the data has been volatile.

Key expectations include:

  • Payroll growth: Forecasted at +160k.
  • Unemployment rate: Expected to hold steady at 4.2%.
  • Average earnings growth: Anticipated at +4.0% year on year.

Stronger-than-expected results could further support the dollar, while softer data may raise questions about the Federal Reserve’s monetary policy trajectory in 2025.

How Could This Impact Your Business?

Narrow trading ranges may provide a brief reprieve, but today’s labour market data has the potential to reignite volatility. Businesses trading in GBP/USD or EUR/USD should prepare for potential price swings as markets digest the US employment figures.

Contact Qumoney’s experts today to discuss strategies for managing currency exposure and seizing market opportunities.

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