Currency forecast: April-June

Smart Currency Business Quarterly Forecast, April-June 2025.

Our April to June Quarterly Forecast arrives at a moment of turmoil in global financial markets. American tariffs have ignited a trade war and left Europe’s politicians and business community scrambling. Even the penguins haven’t been spared, although Donald Trump has indicated at least some desire to bring the temperature down in recent days.

With all the uncertainty, and with sterling moving by upwards of 5% against the euro and US dollar since the start of April, what can your business expect in the months ahead?

UK and Europe sense danger and opportunity

The outlook for the UK has grown murky. Chancellor Rachel Reeves and Bank of England governor Andrew Bailey have a massive job on their hands in fighting inflation, stabilising the bond market and providing confidence that British companies can operate with stable cashflow and profit margins, even as higher costs and National Insurance Contributions (NICs) take effect.

Trade tariffs might not be implemented to the full extent laid out on “Liberation Day”, but even 10% levies could force redundancies and shock across key industries. According to the International Monetary Fund (IMF), the world economy stands to lose $1trn from global GDP. The effects of that will be felt keenly in the UK, with the IMF downgrading its growth forecast for the British economy at the same time.

Europe had been considered uniquely exposed to these measures. However, Trump’s climbdown, spending initiatives from governments and a flight away from the US dollar has seen the EUR/USD surge to a three-year high and take the pound down a peg. The eurozone is keen to negotiate a trade deal before the 90-day window expires, but a new mood of optimism is sweeping the continent.

Dollar faces “confidence crisis”

The same cannot be said for America. Recent turbulence has led to a reappraisal of the US dollar, a move some have called a “confidence crisis”. Wall Street has experienced a massive correction, with stock indices volatile and exposed to rapid about-faces from US government policy.

The key question markets are asking is whether the US dollar can be the world’s de facto safe-haven currency. Trade whiplash has made investors skittish and forced them to pivot to new, safe assets. A host of global currencies are vying for the safe-haven mantle, the euro and Chinese yuan among them. But for Donald Trump, the US dollar very much plays second fiddle to his other concerns, particularly addressing trade imbalance. Suffice it say markets are not convinced this is sensible policy.

Making sense of the chaos

Businesses need all the information at their disposal to make sense of this chaos. After all, the kind of long-term, strategic treasury management that can safeguard success is thrown into question by “Grey Swan” events and widespread uncertainty. Our report provides all the information you need to navigate another volatile spring.

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