Currency Markets: A Week of Surprising Twists and Economic Forecasts
Pound Reaches Milestone Against Euro
The past week concluded with the pound achieving a remarkable two-year high against the euro, highlighting the dynamic nature of current currency markets.
US Election Aftermath and Dollar Dynamics
Following the US election results, the dollar experienced a brief strengthening before relinquishing some gains as global markets carefully analyse the political landscape’s economic implications.
Bank of England’s Unexpected Move
The Bank of England delivered a surprising policy announcement, implementing a modest 0.25 percent interest rate cut. This decision came against a backdrop of improved UK economic growth and inflation currently running above target.
Inflation and Fiscal Outlook
The central bank anticipates slightly higher inflation in 2025, influenced by the government’s budget. The budget suggests substantially increased borrowing to fund significant public spending expansions, potentially complicating future monetary policy decisions.
Looking Ahead: Key Economic Indicators
Upcoming Economic Data Releases
- Tuesday: Focus on UK employment figures and German ZEW confidence numbers
- Wednesday: US inflation figures, critically important following recent Federal Reserve announcements
- Thursday: EU growth figures
- Friday: UK growth figures and industrial production numbers
Market Implications
The December rate cut, previously considered almost certain, now appears less predictable. Investors and economic analysts are closely monitoring these upcoming releases for potential market insights.
For additional insights on how this could affect your business or to capitalise on market volatility – please reach out to speak to one of our experts.