14 April 2025
Tariff tensions fuelled currency volatility, with the dollar sliding, the euro hitting multi-year highs, and sterling fluctuating on UK growth and uncertainty.
Market Recap: Key Movers from Last Week
Markets were dominated by tariffs for a second week, after President Trump announced a temporary suspension of punishing levies on dozens of countries, just a few days after imposing them. At the same time, the US increased tariffs on Chinese imports to 124% from the previously announced 104%, before exempting a range of electronic goods, including smartphones and computers.
While stock rallied, the volatility of US policy undermined confidence in the dollar, with the euro gaining ground. At one point the euro hit a three-year high against the greenback, as the dollar plummeted to a long-term low against a basket of major currencies.
Better-than-expected UK growth figures boosted the pound, which was moving close to a six-month high against the dollar on Friday. However, sterling continued to fall against the euro, and has now lost 1.5% in the past 12 months.
What’s to come
Economists still expect a UK interest rate cut in May, with many predicting four in total in the remainder of 2025.
President Trump’s tariff pause will last 90 days, allowing time for negotiations. The progress of those talks is likely to impact market sentiment for the next few weeks. Much uncertainty remains. Consumer confidence in the US and around the world has slumped, adding to the risk of recession.
How we can help you:
In a highly turbulent environment, ensuring effective currency risk management and margin protection is essential. We work with clients to manage volatility and mitigate risk.
At Lumon, we help businesses manage downside risk in foreign exchange markets while providing the flexibility to benefit from favorable rate movements.
To discuss how we can support your business, please contact your dedicated currency specialist on +44 (0) 203 384 7280 to discuss solutions tailored to your needs.
