17 March 2025
Weekly Market Headlines:
Volatility has continued to dominate currency markets over the past week, primarily driven by widespread weakness in the US dollar. This follows a significant repricing last week, which saw the world’s reserve currency fall to multi-month lows against both the pound and the euro.
- Growing concerns about a potential US recession have led markets to price in the prospect of three rate cuts from the Federal Reserve this year. This has added further complexity to an already uncertain economic outlook, with the European Central Bank (ECB) and the Bank of England also being closely monitored for potential rate cuts to support economic activity.
- Last week, GBP/USD climbed to near six-month highs, gaining more than 6% from its January lows, though substantial risks remain. All eyes will be on the Federal Reserve meeting on Wednesday and the Bank of England meeting on Thursday, both of which could provide key indicators for the next phase of market direction.
- The UK economy contracted month-on-month last week, heightening concerns that the country could be heading toward a recession. Traders are already shifting focus to next week’s UK Spring Budget, which is likely to introduce heightened volatility and uncertainty surrounding the pound. With the Chancellor facing challenges in managing the nation’s finances, particularly following January’s turmoil in UK debt markets, could we see a repeat of the instability witnessed last Tuesday?
- Over the past six months, volatility has returned significantly, with GBP/USD weekly variance reaching its highest level since 2023. In this environment, ensuring effective risk management and margin protection is essential. We continue to work closely with our clients to implement simple yet effective strategies that mitigate currency risk and manage volatility.
Key Market Insights:
- Monday: US Retail Sales data
- Wednesday: US Interest Rate decision
- Thursday: Bank of England Interest Rate decision
How we can help you:
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.
