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The UK has been the star performer of the G7 so far in 2025
Sterling recovered to its strongest position for six weeks against the euro yesterday, while maintaining its strength against the US dollar, following better than expected economic results.
Gross Domestic Product (GDP) grew by 0.7% in the first quarter of 2025, a strong acceleration from the back end of last year and powered by the UK services sector. It means that the UK tops the G7 growth table, as the Prime Minister was quick to point out. The caveat is that these are preliminary results, subject to change, and in any case come before the full impact of the trade war. The former boss of JP Morgan, Jamie Dimon, warned that this doesn’t mean that the UK will avoid a tariff-caused recession.
Hence the pound could easily wilt as we come into the summer months. 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.
Also in yesterday’s results, GDP in the eurozone grew by 0.3%, also above expectations, while a final result for French inflation found it was higher than preliminary figures, rising by 0.6% in April. None of this particularly supports calls for an ECB interest rate cut next month.
There was interesting data from the US too, where the numbers were affected by foreign firms getting exports into the US before the tariffs came in, causing GDP to contract slightly. US consumers were cutting back on spending, and retail sales fell back from 1.7% growth in March to just 0.1% in April. American Producer Price Inflation (PPI) fell last month by 0.5%, the sharpest drop since the start of the pandemic in April 2020.
Overall, it was the safe-haven currencies the Japanese yen and Swiss franc in the ascendancy as a ‘risk off’ mood prevailed and big investors sought out less risky assets
In business news, the UK health food retailer Holland & Barrett has thanked weight loss drugs like Ozempic for boosting its food sales by 34% year-on-year.
The cuts in interest rates have come too late for more and more UK householders. The Ministry of Justice released figures that show mortgage repossession claims up by 31% and repossessions by bailiffs up by 42% at the start of 2025 compared to early 2024.
Economics can play havoc with people’s lives, which is why at Smart Currency we advocate a risk-management approach. Please call your account manager to reduce your exposure to the vagaries of the money markets.
GBP: Economic boost for sterling
The pound strengthened against most pairs yesterday, apart from the two safe-haven currencies: the yen and Swiss franc. The rises were most notable against the various dollars and krone, while hitting a six-week high against the euro. It’s a slow start to next week but on Wednesday we’ll see the potentially market-moving inflation figure.
GBP/USD past year
EUR: Mixed day for euro
It was a performance of two halves for the single currency, but there was most red in the figures (indicating weakening) against the pound, yen and Swiss franc. There’s a somewhat bitty start to next week’s data – with final results for inflation, and PPI – but livening up on Thursday with PMI.
EUR/USD past year
USD: Shoppers rein in spending
More losses for the US dollar yesterday, after retail sales fell back sharply in a day packed with economic data, overall showing a mixed and confusing economic picture for the world’s biggest economy right now. We’ve got some housing numbers coming out this afternoon as we enter a quiet period for data.
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.
