Tag Archives: FXnews

ECB interest rate cut impact on markets
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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: ECB Rate Cut Anticipation Fuels Market Volatility
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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.

Pound Lags as Tariff Fears Return Despite UK GDP Surprise
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Market Focus: Key PMI and Inflation Data in the Spotlight

This week kicks off with a focus on PMI figures from the EU, Germany, and France, alongside key inflation and employment updates. Here’s what you need to know about today’s market events and their potential impact.

EU PMI Figures in Focus

Later this morning, the EU, Germany, and France will release their PMI figures, which are expected to come in stronger than last month. If these expectations are met, the data could provide a much-needed boost to the euro, offering temporary support amid ongoing market pressures.

German Inflation Data to Be Released

This afternoon, attention shifts to German CPI figures, with forecasts suggesting that inflation will tick higher for December. The outcome will be closely watched as it could influence the European Central Bank’s (ECB) policy stance ahead of Thursday’s ECB Economic Bulletin, which is expected to reinforce the need for further interest rate cuts.

US Data: Factory Orders and Job Gains

The US Factory Orders report is due late this afternoon and will add to the picture of the US economy’s resilience. Later in the week, markets will turn their attention to Friday’s employment figures, where job gains are expected to remain elevated for December. This ongoing strength supports the narrative of a robust US economy, further bolstering the US dollar.

UK Data: A Quiet Week

It’s a relatively quiet week for UK data, with the Housing Index numbers set to be released tomorrow. With little to drive sterling from the UK side, markets are likely to remain focused on developments in the EU and US.

Currency Outlook

  • The euro edged slightly higher last week, supported by strong Spanish inflation data.
  • The US dollar continues to show strength, reflecting the ongoing economic recovery in the United States.

Businesses trading internationally should remain vigilant as this week’s data could drive currency fluctuations.

How Could This Impact Your Business?

Market volatility tied to PMI figures, inflation data, and employment reports presents opportunities to hedge risks and capitalise on favourable exchange rates.

Contact Qumoney’s experts today for tailored advice to help your business navigate currency markets and protect your financial strategy.

Market Update: Pound Gains as Key Economic Events Approach
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Market Update: US Data Boosts Dollar as PMI Revisions Weigh on Europe and UK

Recent economic data underscores the evolving dynamics of global markets, with the US dollar strengthening on the back of positive surprises and a favourable economic outlook.

US Jobless Claims Hit 8-Month Low

The latest US weekly initial jobless claims fell to an eight-month low of 211k, outperforming the forecasted 222k. While seasonality may have influenced the data, it highlights the resilience of the US labour market.

Additionally, the US manufacturing PMI was revised higher for December, contrasting with downward revisions for both the Eurozone and UK PMIs, which remain in contraction territory.

Dollar Dominates Currency Markets

The US dollar strengthened significantly yesterday:

  • Rising 0.8% against the euro.
  • Gaining more than 1% against sterling.

This surge was driven by better-than-expected US data, a stronger GDP outlook, and optimism surrounding the potential policy mix of the Trump administration. These factors have reinforced confidence in the dollar, putting pressure on other major currencies.

What to Watch Today

Markets are now focused on the US manufacturing ISM for December, a key release that could further influence sentiment and currency movements. Meanwhile, remarks by ECB Chief Economist Philip Lane are expected to provide insights into the Eurozone’s economic trajectory and policy direction.

How Could This Impact Your Business?

The stronger dollar and diverging economic conditions highlight the importance of staying informed. Whether you’re managing international payments or navigating currency risks, understanding these trends is essential.

Contact Qumoney’s experts today to discuss tailored strategies to safeguard your business and capitalise on market opportunities.

UK house prices rise, ECB interest rate cut, GBP/USD at 9-month low
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UK House Prices Rise as Market Dynamics Shift

The latest Nationwide House Price Index reveals a 0.7% increase in UK house prices for December, significantly exceeding the forecasted 0.1%. For the year 2024, UK house prices rose by an impressive 4.7% year-on-year, reflecting renewed strength in the housing market.

Key Drivers Behind the Surge

Several factors contributed to this unexpected jump in house prices:

  • A marginal drop in the headline interest rate.
  • Improved buyer sentiment, fuelled by slowing inflation.

This combination has bolstered demand, driving price growth even as economic uncertainties persist.

Euro Under Pressure as ECB Outlook Weakens

The euro remains under pressure against both the pound and the dollar as the new year begins. Market sentiment reflects expectations of an ECB interest rate cut later this month, further weighing on the euro’s performance in currency markets.

GBP/USD Hits 9-Month Low

As the Bank of England signals a potentially more aggressive approach to interest rate cuts compared to the Federal Reserve, the GBP/USD currency pair is trading at a 9-month low. This divergence in monetary policy outlooks is creating headwinds for the pound, underscoring the challenges ahead for sterling in 2025.

How Could This Impact Your Business?

With fluctuating house prices and diverging monetary policies, businesses need to stay informed and agile. Whether you’re managing currency exposure or navigating the real estate market, preparation is key.

Contact Qumoney’s experts today to explore strategies for capitalising on market opportunities and protecting your financial position as we head into 2025.

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