By Ashley Finill
It’s been a livelier second half of the week with data releases waking up the currency market. Yesterday morning the UK posted GDP figures for the 4th quarter of 2024 which came in at 0.1%. This is good news for the UK as it has shown some growth albeit marginal, It had been expected that the figure was to show a contraction of 0.1% for Q4 following zero growth readings for the previous three months to September. The recovery for growth in Christmas spending and manufacturing during December came to the UK’s rescue. The growth figure may also ease the Bank of England’s concern for the UK economy and could see them opt to hold the interest rate at their next meeting. The positive GDP figure gave Sterling a boost throughout yesterday’s trading gaining just over half a cent on the Euro, could this be a turning point for the Pound?
Dollar Losses after US Putin Talks
Yesterday news broke that peace talks between the US president Donal Trump and Russia’s Vladimir Putin are starting to take shape after a phone call took place on Wednesday. Although no ceasefire deal has been struck yet, talks between the nations of Russia, Ukraine and the US are expected to take place over the coming weeks. Should a deal be struck between all parties then this would end a conflict that has spanned nearly 3 years when Russia invaded Ukraine in late February 2022. Since the conflict, the US dollar had thrived against the majors with it having a safe-haven status. Since the news of talks breaking yesterday, the Dollar has started to weaken across the board with Sterling gaining over 2 cents since the beginning of the week and the Euro has also climbed over a cent on the greenback too. Although a ceasefire may sometime off, we can expect the markets to continue to react to any news breaking regarding the ongoing conflict and potential resolution. In other news from the US regarding Trumps tariff trade war, the President has further sparked fears of a global trade war after last night signing an order to put “reciprocal tariffs” in place, which threatens to impose tariffs as a retaliation for charging VAT on US goods. It was thought earlier this week that the UK could dodge any of the tariffs imposed but with this new charge on countries such as China, Mexico, Ireland, and Germany the UK may be next in line to face rising costs when importing goods from the US.
Data remaining Today
As we see out the end of the week there are still a couple of data releases to take note of which are likely to cause volatility in the currency market. In the EU at 10am the Eurozone post GDP figure for Q4 of 2024, the figure is expected to remain a 0% from Q3, any difference in this figure is likely to shake up things this morning. Lastly in the US Retail Sales figures will be posted at 1.30pm, a contraction is expected from the figures in December as January is generally down after Xmas spending. As always stay in close contact with your currency consultant for friendly, professional guidance.