Currency Shifts and Central Bank Signals Define the Week

By Currency Global | April 14, 2025

Market Overview: 7–13 April 2025

Currency performance:

  • GBP/USD: The pair reached a high of approximately 1.30 midweek before retreating to around 1.292 by Friday, reflecting a weekly fluctuation of about 0.6%.
  • EUR/USD: The euro appreciated against the dollar, peaking near 1.105, driven by expectations of ECB rate cuts and concerns over U.S. economic policies.
  • GBP/EUR: The pound weakened against the euro, with the pair trading near 1.17, as the euro’s strength outpaced that of the pound.

Commodities:

  • Gold: Prices surged past $3,200 per ounce, the highest on record, as investors sought safe-haven assets amid global economic uncertainty.
  • Oil: Prices fell to a four-year low, reflecting concerns over global demand amid escalating trade tensions.

Key Economic Events: 14–20 April 2025

This week features several significant economic releases and central bank decisions that could influence currency markets.

United Kingdom

  • Tuesday 15 April: Average Earnings Index (February) – Provides insight into wage growth, a critical factor for the Bank of England’s inflation assessments.
  • Wednesday 16 April: Consumer Price Index (March) – A key measure of inflation, influencing monetary policy decisions.
  • Thursday 17 April: Retail Sales (March) – Reflects consumer spending trends, impacting GDP growth forecasts.

Eurozone

  • Monday 14 April:
    • Trade Balance (February) – Indicates the difference between exports and imports, affecting the euro’s strength.
    • Consumer Price Index (March, YoY) – Measures inflation, guiding European Central Bank (ECB) monetary policy.
  • Thursday 17 April: ECB Interest Rate Decision – The ECB is expected to cut its deposit rate by 25 basis points to 2.25% in response to mounting risks of lower inflation and slowing economic growth.

United States

  • Tuesday 15 April: Retail Sales (March) – A vital indicator of consumer spending, influencing GDP growth projections.
  • Wednesday 16 April: Housing Starts (March) – Reflects construction activity, impacting economic outlook.
  • Thursday 17 April: Initial Jobless Claims – Weekly data on unemployment claims, signalling labour market conditions.
  • Friday 18 April: University of Michigan Consumer Sentiment Index (April) – Gauges consumer confidence, affecting spending behaviour.

Latest Market Volatility:

• GBP/USD: Reached a recent high of approximately 1.3182 on 14th April 2025, reflecting a 0.7% increase from the previous session, driven by sustained US Dollar weakness amid global trade tensions, particularly between the US and China.
• EUR/USD: Climbed to 1.1473 on 11th April 2025, marking its highest level since February 2022.
• GBP/EUR: Fell to a recent low of 1.1444 on 11th April 2025, the lowest in over a year, as investor concerns over the UK’s economic outlook and expectations of interest rate cuts by the Bank of England weighed on the pound.

Central Bank Policies and Economic Indicators

Bank of England (BoE)

  • BoE officials expressed concerns over the inflationary impact of U.S. tariffs. Policymaker Megan Greene highlighted the uncertainty surrounding the potential inflationary effects, noting that exchange rate movements play a significant role in determining these outcomes.

European Central Bank (ECB)

  • The ECB is considering accelerating its rate-cutting agenda to mitigate recession risks. Markets anticipate multiple rate cuts—up to four by year-end—as the expected economic slowdown and falling market confidence outweigh inflationary pressures.

Federal Reserve (Fed)

  • The Fed faces pressure to cut interest rates amid market turmoil and recession fears. However, concerns over policy clashes with the administration’s aggressive tariff stance complicate the decision-making process.

Policy Developments and Market Implications

U.S. Tariffs

  • The U.S. administration’s implementation of extensive tariffs has raised concerns over global economic growth and increased the risk of severe financial shocks. The Bank of England’s Financial Policy Committee noted increased uncertainty and deteriorating global risk conditions, exacerbated by recent U.S. trade measures.

UK Economic Outlook

  • The UK economy grew 0.5% in February, surpassing expectations due to strong performance in services and manufacturing, particularly in electronics, pharmaceuticals, and car production.

If you have upcoming currency requirements and would like expert guidance on navigating the markets, don’t hesitate to contact one of our consultants at 020 3876 5432.

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