By Ashley Finill
As we enter the midpoint of the 2nd working week of 2025, Sterling has continued to have a slow start in the currency market, with the US Dollar continuing its dominance on both the Euro and the Pound, although the greenback did drop off against the majors across the day on Tuesday due to an article from the Washington Post suggesting that the president elect Donald Trump was expected to water down plans for universal tariffs. The release of the article gave Euro a surge on the Dollar which clawed back some much needed ground, but this was short lived as Trump quickly scuppered those rumours as he engaged with followers online to say the rumours were not true, and as a result the Dollar losses were reversed. The US Dollar has also been helped by news from its Economy as there are still growing inflation pressures, such pressure would indicate that the Fed will not look to cut interests rates in the country at their next meeting. An economist at Wells Fargo has said this week, that they think the Fed are likely not to cut rates again until July. Should that be the case then we might expect further strength for the dollar throughout 2025, as the ECB and BOE may look to cut rates further before July. Later this week the US release non-farm payrolls and should this be a positive release then we can expect the Dollar to gain more ground on the majors.
Political News
Yesterday afternoon, President Elect Donald Trump held a press conference speaking on current issues globally and what he plans to do when he comes into office later this month. He touched on ongoing conflicts in the middle east and Ukraine where such events have impacted the currency markets, the reason being is with conflict brings uncertainty which investors act on and put their faith into the safe-haven US currency, which as result has seen the Dollar make steady gains on the majors since both conflicts began. Trump also spoke on issues in Canada as this week the Canadian Prime minister Justin Trudeau announced he was stepping down. Mr Trump said he believed the US northern neighbour should become the 51st US state, he even posted maps on social media showing Canada as part of the US. Trump said he is planning to use “economic force” against their neighbours. Trump has said that the US has spent “hundreds of billions” of dollars to protect Canada while running a trade deficit. He is now threatening to impose tariffs on Canadian imports.
Data today
This morning we have a couple of data release from the EU. Germany have posted retails sales and factory order early doors both showing a contraction from last month, this resulted in Sterling making some ground on the euro but at the time of writing the pound has since reversed those marginal gains. At 10am the EU post Business Climate, Consumer Confidence and Prouder Price Index so there may be some volatility after the release. in the afternoon the US release ADP Employment Change which is a precursor to non-farm payrolls which will be posted on Friday this week. As always stay in close contact with your currency consultant for professional friendly guidance.