17 February 2025
Weekly Market Headlines:
GBP/USD is now trading near 10-week highs following a broad market sell-off of the US dollar last week. This comes despite the Bank of England lowering its UK growth forecast from 1.5% to 0.75% and widespread expectations that the US Federal Reserve will hold off on rate cuts through 2025. In contrast, the UK’s interest rate outlook suggests a more dovish path, with markets currently pricing in up to four rate cuts from the BoE this year—aimed at supporting a slowing and uncertain economy.
Key Market Insights:
- Currency market volatility remains elevated, following a 10% move in GBP/USD in Q4 2024, with 2025 already experiencing a 4.5% variance.
- For context: A business with a $500k GBP/USD exposure per month in 2024 would have faced a monthly cash flow variance of approximately £12,000, and in Q4 alone, £132,000.
- UK inflation figures (Wednesday) and retail sales data (Friday) will be key market drivers this week.
- Looking ahead, the March Spring Budget is expected to attract intense market scrutiny, with expectations that it will begin to be priced in soon.
How we can help you:
At Lumon, we help businesses manage downside risk in foreign exchange markets while providing the flexibility to benefit from favourable rate movements. Additionally, we collect monthly forecasting data from over 50 banks, offering an unbiased and regularly updated view of market sentiment for the next 12 months.
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.
