020 7898 0500
GDP rose in the UK above expectations
It was a mixed day for sterling yesterday, with more significant falls against the euro, yen, Swiss franc and others, but recovery against the US dollar and the commodity-backed currencies such as the Aussie dollar and Norwegian krone.
Worries for anyone buying euros must be growing, with another loss of over 1.5%, taking GBP/EUR down to its lowest since December 2023, a loss of 5% in six weeks.
The story is not so much sterling weakness as the euro’s, Swiss franc’s and yen’s strength. Each has posted gains in excess of 2% against the US dollar, and other currencies, day after day this week.
Indeed, there are positive signs for the UK economy, with GDP (Gross Domestic Product) just announced to have shot upwards last month by 0.5%, taking it to 1.4% year on year. This is far ahead of expectations and in the face of the Office for Budget Responsibility’s halving of growth predictions just two weeks ago.
Thus far, the GDP result has been of minimal impact to the pound, with global economics carrying considerably more weight.
The bigger picture is that as President Trump attempts to bring industry and jobs back to the USA, with the inevitable end result of higher prices for goods for consumers – iPhone creator Sir Jonny Ive has pointed out that a US-made smartphone would cost more than three times as much – and smaller profits for business, so money has flown out of US stock markets.
The latest on tariffs is that all other countries will be paying 10% on their US exports, without the extras announced by Trump last week. Thus the UK’s previous “minimum tariff” advantage has been lost. China’s tariffs are apparently now up to 145%.
Amidst all of this, the usual data has not stopped. Ironically, given how inflationary tariffs will be, US inflation dropped significantly in March, to an annualised 2.4%, from 2.8% last month, some way below expectations. The Fed will be as gloomy as Chinese exporters at the sight of their hard work bringing inflation about to be wrecked – higher prices are expected to reach American shoppers by the end of April.
It has never been more important to 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 Business Account manager on 020 3918 7255 to get started.
GBP: Another torrid day for GBP/EUR
The falls continued for the pound, against the euro in particular, taking it down to a 16-month low. GBP/USD strengthened by 1% over the course of the day, however. With GDP just announced, we won’t have to wait long for more data – unemployment and earnings on Tuesday and then inflation on Wednesday.
GBP/USD past year
EUR: Euro posts more large gains
Further strength since yesterday now takes the euro’s gains since the start of 2025 to more than 9% against the US dollar and Chinese yuan and 5% against the pound. It’s further bad news for European exporters, on top of tariffs. ECB President Christine Lagarde will be speaking this morning, and the next data of note is the ZEW Economic Sentiment Index for Germany on Tuesday.
EUR/USD past year
USD: Dollar loses across the board
It’s a sea of red for the US dollar again this morning, with losses multiplying as money moves out of US stocks. The only real influence on the dollar right now is what’s coming out of the Oval Office, but eventually the impact of the current crisis on interest rates will be felt again, and this afternoon we will have US Producer Price Inflation data and Michigan Consumer Sentiment.
USD/GBP past year
For more on currencies and currency risk management strategies, please get in touch with your Smart Currency Business account manager on 020 3918 7255 or your Private Client account manager on 020 7898 0541.
