January 2025

Increasing Market Volatility

Posted on by Will R
The British Pound saw increased volatility during yesterday’s trading session, following the release of UK employment data. Unemployment unexpectedly rose from 4.3% to 4.4%, weakening the Pound. However, GBP received some support from higher-than-expected wage growth, which increased from 5.2% to 5.6%. Despite the mixed data, the British Pound remained under pressure against the U.S. Dollar, with market reactions to President Trump’s early actions adding uncertainty.

 
The Euro declined against most currencies yesterday, following Germany’s Zew economic sentiment index, which showed a significant drop in economic morale. The index fell from 15.7 to 10.3, increasing speculation of a potential European Central Bank interest rate cut. Ultimately, this contributed to the weakening of the Euro, with further movements likely influenced by an upcoming speech from ECB President Christine Lagarde.

 
The U.S. Dollar initially lost ground after President Trump delayed announcing trade tariffs, but regained strength following warnings of potential 25% tariffs on Mexico and Canada. Market volatility is expected to remain high, with speculation that the Dollar could strengthen. However, concerns about Trump’s currency manipulation stance and potential tariffs on China create uncertainty, adding further volatility to the Dollar’s outlook.

Dollar Dominance

Posted on by Will R
The British Pound continues to struggle, weighed down by concerns over the UK’s fiscal health. In fact, the currency fell against most counterparts, with market sentiment remaining negative. With no major domestic data releases expected, GBP is likely to remain under pressure as investors focus on the country’s financial outlook. Ultimately, the ongoing uncertainty about the UK’s economic stability is expected to keep Sterling weak in the near term.

 
The Euro strengthened against the Pound but struggled elsewhere as market sentiment weighed on the currency. Looking forward, investors are awaiting a speech by European Central Bank policymaker Philip Lane, which could provide direction. In fact, a dovish tone from Lane might stoke expectations for a rate cut, potentially putting pressure on the Euro. Ultimately, the upcoming economic data and ECB guidance will be key for the Euro’s near-term outlook.

 
The U.S. Dollar strengthened as market demand increased, fueled by expectations that the Federal Reserve may not cut interest rates further this year. Moreover, the greenback’s strength was supported by a risk-off sentiment in global markets, with the currency benefiting from its safe-haven status. Ultimately, investor caution and shifting economic expectations continue to underpin the Dollar’s dominance in the current market environment.