December 2024

Currency Market Update- Increased Pressure

Posted on by Will R
The British Pound rose to its highest level against the Euro since April 2022, driven by expectations that the Bank of England will be slower in cutting interest rates compared to the European Central Bank. In fact, interest rate differences between the UK and Eurozone are predicted to widen in the coming year. Ultimately, sterling’s increase reflects the UK’s strong economic growth and persistent inflation.

 
The Euro slipped against a basket of currencies ahead of tomorrow’s ECB policy meeting. The European Central Bank is expected to cut rates by 25-basis points, its fourth cut this year, which could signal further easing. Ultimately, analysts anticipate a dovish outcome, with the ECB potentially discussing more rate cuts, putting pressure on the Euro’s value.

 
The U.S. Dollar edged higher ahead of the highly anticipated November consumer inflation report, which could influence the Federal Reserve’s interest rate decisions. In fact, the Dollar Index rose slightly, as market focus remains on the inflation data, expected to show a modest increase. Ultimately, with the Fed having cut rates recently, any signs of stalled inflation progress could prompt a reassessment of future rate cuts.

 

Currency Market Update- Predicted Stability

Posted on by Will R
The British Pound has outperformed both the Euro and the U.S. Dollar during the Thanksgiving period. In fact, stronger UK data as well as relative rate expectations have supported the Pound. Despite some choppy month-end movements, the Pound is expected to maintain its outperformance, with analysts predicting stability around current levels and an unchanged Bank of England decision in December.

 
The Euro is under pressure this morning due to a political deadlock in France, where the government’s failure to meet budget demands raises the risk of a no-confidence vote. This uncertainty could weigh on the Euro. In fact, the Pound-Euro exchange rate trades above recent ranges, with the potential for a retest of the 2024 highs, depending on political developments and the outcome of budget negotiations.

 
The U.S. Dollar has gained further strength following Trump’s recent tariff threats, with the greenback benefiting from his aggressive geopolitical stance. However, while the Dollar is experiencing a rebound, analysts suggest it could face resistance, especially with concerns about future rate cuts and economic data. Moreover, December’s traditional USD weakness might also lead to a potential slowdown in its rally.