13 January 2025
Weekly Market Headlines:
The pound has continued its downward trend, with GBP to USD now trading at levels not seen in nearly two years. Recent market activity reflects growing concerns about the UK’s economic outlook, with Bloomberg analysts warning of a potential further 8% decline. For businesses reliant on international transactions, this heightened volatility could have significant financial implications.
What’s driving the decline?
- The pressure on the pound is fuelled by a combination of domestic and global factors. Market comparisons have been drawn to the turmoil of 2022, following Liz Truss’s mini-budget, which led to a record-low GBP to USD rate of 1.0300. Today’s challenges stem from rising concerns over the UK’s debt levels and the continued strength of the US dollar, underpinned by a resilient US economy.
- With the Federal Reserve signalling limited rate cuts this year, global demand for US Dollars is expected to remain strong, potentially putting further downward pressure on the pound.
How to stay protected
- To mitigate the impact of further volatility, businesses like yours are exploring proactive strategies to secure their positions. By hedging against potential currency risks, you can gain peace of mind knowing your costs are protected, regardless of market fluctuations. Lumon’s tailored solutions are designed to help you stay ahead in an unpredictable market.
We’re here to help
- Our currency experts are on hand to provide personalised guidance and discuss options that align with your business’s goals. Whether it’s exploring forward contracts, spot trades, or other tools, we’ll work with you to create a strategy that puts you in control.
Would you like to explore hedging options or discuss strategies to safeguard your business? Contact your account manager on +44 (0) 203 384 7280 to explore Lumon’s options for managing risk.
What events might move exchange rates this week?
GBP
- Wednesday: Inflation data
- Thursday: GDP, Industrial & Manufacturing Production data
- Friday: Retail Sales
EUR
- Thursday: European Central Bank minutes
USD
- Wednesday: GDP data
- Thursday: Retail Sales