10 February 2025
Weekly Market Headlines:
It was a busy week in the currency markets as the Bank of England (BoE) cut interest rates by 25bps. However, markets were caught off guard by the unanimous vote, with all nine committee members supporting the cut. Notably, two members advocated for a 50bps cut, signalling a more aggressive easing stance.
Key developments:
- The BoE revised down its UK growth forecast for 2025 from 1.5% to 0.75%, raising concerns over a prolonged slowdown and potential stagflation—a period of high inflation and weak economic growth.
- Markets are now pricing in three additional rate cuts in 2025, with a possible fourth later in the year, as Governor Andrew Bailey indicated that lower interest rates will be needed to support growth.
- Over the weekend, President Trump imposed 25% tariffs on all steel and aluminium imports into the US, a move with significant ramifications for Canada and Mexico, two of the US’s largest steel trading partners.
How it affects you:
With global markets adjusting to these developments, currency volatility is expected to remain high. At Lumon Corporate, we support over 2,500 businesses across the UK and Europe, providing tailored hedging and execution strategies to mitigate currency risk and enhance cash flow stability in uncertain times.
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.
What’s happening this week?
Tuesday:
- Speeches from BoE Governor Andrew Bailey and Federal Reserve Chair Jerome Powell
Wednesday:
- UK GDP figures on Thursday, providing further insight into economic momentum
Thursday:
- Key US inflation data on Wednesday, which will influence Fed rate expectations
