020 7898 0500
The US dollar continued to slide to open the new week.
The US dollar sank to its lowest ebb in four months yesterday and its weakest since July against the pound.
After the Greenland saga brought about its worst week since May, the US dollar continued to struggle even as other traditional safe-haven assets – including gold, silver and the Swiss franc – recorded a strong start on Monday.
Even a strong showing in November’s durable goods report wasn’t enough to arrest its slide. New orders soared by 5.3% month-on-month after a noteworthy rebound for transportation equipment. Electronics and non-defence items also increased from October.
The German economy is expected to perform well this year after the government’s budget passed back in November. That didn’t stop the Institute for Economic Research’s (Ifo) business climate survey remaining unchanged in January, defying expectations of a slight improvement.
Here in the UK, the political fallout from the prime minister’s decision to block Manchester mayor Andy Burnham from standing in an upcoming by-election rumbled on. There was drama on the other side of the House of Commons too, as prominent Tory Suella Braverman announced her defection to Reform UK.
After a U-turn over the business rates paid by UK publicans, Rachel Reeves is reportedly set to announce a support package worth £100m today. The chancellor has heeded the uproar from the industry but hasn’t extended her largesse to the restaurants, cafes and hotels, which had been hoping for help under the same package.
While Monday was light on economic news, this week sees a major schedule of earnings reports from the ‘magnificent seven’ tech firms, including Apple, Meta and Microsoft. The Federal Reserve’s latest interest rate decision comes tomorrow evening and will be an interesting chance for the US dollar to stop its slide.
Make sure any upcoming transactions are protected against the risks of sudden market movements. Secure a fixed exchange rate now with a forward contract; call your account manager on 020 3918 7255 to get started.
GBP: Quiet start despite political risk
Sir Keir Starmer’s high-wire decision to block Andy Burnham’s return to Westminster had no immediate impact on the pound or borrowing costs on Monday. That will come as a relief to weary investors, yet it may only delay the disruption until May’s local government elections.
GBP/USD: the past year
EUR: Growth data the highlight
In an otherwise quiet week, Friday’s preliminary gross domestic product figures for the final months of 2025 could be a major catalyst for the euro. Experts are predicting a particularly strong performance from Germany, even if the bloc’s headline growth figure might not reach the third quarter’s 0.3%.
GBP/EUR: the past year
USD: Rattled by Japan rumours
Speculation that the US and Japan had teamed up to support the (until recently) struggling Japanese yen knocked the US dollar down again on Monday. The dollar index – which tracks its performance against a basket of rival currencies – fell to a four-month low.
EUR/USD: the past year
For more on currencies and currency risk management strategies, please get in touch with your Smart Currency Business account manager on 020 7898 0500 or your Private Client Account Manager on 020 7898 0541.
