By Paul Newfield
This week we have seen the Pound gain over half a cent against the Euro, despite Trump announcing Kevin Warsh as the new head of the Federal Reserve, to take over when current chair Jerome Powell’s term expires in May, later this year. Warsh is seen by the markets and analysts as “a very acceptable choice” and the Dollar briefly strengthened against the Pound and Euro after this announcement, with the whipsawing of precious metal prices, as investors cashed in on gains made and raced back to the Dollar, but it was short lived. In 2025, the Dollar weakened against the Pound by as much as thirteen cents but the rate reached four-year highs at the end of last month. Unusually it seems Sterling is gaining against both of the other majors at the time of writing but how long will it last?
The major worry for the US Dollar, and investors in the currency, is the extreme reversal of trade policy – the US now has far more oil and gas generation and reserves and is one of the largest producers globally, now that they have access to Venezuelas “liquid gold” too, so they will be looking to export far more than they have imported in recent times. Lower interest rates will certainly help with this – one of Trump’s key goals.
Data-wise, we saw Nationwide house prices up on the previous, often a key indicator of how the UK economy as a whole is performing. With Tuesday being a non-event, it falls to economic data releases today and tomorrow to shine some light on where GBP-EUR is headed next, with EU inflation figures this morning, US ISM manufacturing numbers mid-afternoon, and the all-important Bank of England monitory policy meeting and interest rate decision tomorrow at 12pm. These three events, along with the EU’s own interest rate decision shortly after, are likely to stir GBP-EUR further, but which way is anyone’s guess at this point. Rounding off the week we have Halifax house prices in the UK and non-farm payrolls in the US.
To mitigate any potential negative or downside movement in the rates, in these uncertain times, stay in close contact with your dedicated currency consultant and stay ahead of the curve to get the most amount of currency for your money