With no UK economic data scheduled for the remainder of the week, market attention has turned to key events unfolding in Europe and the United States. Here’s the latest on the factors driving currency movements.
German Industrial Output Rises
In Germany, industrial output for November posted a solid 1.5% increase, rebounding sharply from the -1% decline in October. This improvement highlights signs of recovery in the Eurozone’s largest economy, providing some support to the euro.
US Non-Farm Payrolls in Focus
Markets are looking ahead to tomorrow’s non-farm payrolls report, which is expected to show an increase of 160k jobs. A stronger-than-expected result could solidify GBP/USD trading at a one-year low, reflecting the sustained strength of the US dollar.
Speeches from several Federal Reserve policymakers today may also provide further support to the dollar, which has gained momentum thanks to:
- Optimism following Trump’s election.
- The Fed’s projections for rate cuts this year.
GBP/USD Falls Amid UK Economic Challenges
The GBP/USD currency pair has dropped more than 9% since late September, driven by:
- Soaring UK borrowing costs.
- Increasing pressure on Chancellor Rachel Reeves, who faces difficult decisions around borrowing, spending cuts, and tax increases—measures likely to weigh on the UK’s economic growth.
The pound has become the worst-performing currency in the G10 this week, with a fierce selloff highlighting investor concerns as we head into the new year.
How Could This Impact Your Business?
The pound’s weakness and the dollar’s continued strength present challenges for businesses involved in international transactions. However, this market volatility also offers opportunities to hedge currency risks and secure competitive rates.
Contact Qumoney’s experts today for bespoke strategies to protect your business and capitalise on these market dynamics.