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It was a quiet Christmas period for major currencies as stock markets made small, retail-led gains.
With just three days to go in 2025, financial markets received their customary “Santa rally” as stock markets finished last week on the front foot.
While there was action elsewhere, things were a little more restful in the land of currency. The pound, the euro and the US dollar all traded within a narrow range of one another on Christmas Eve as volumes dried up in the quiet period.
The shortened week ahead delivers us the Federal Reserve’s minutes from its last meeting. Those relatively dry, procedural notes can often cause sudden swings in value for the US dollar and other currencies pegged to it given the sensitivity of the American economy (and its currency) to interest rates.
The only other real event of note comes once the clocks have ticked into 2026. Nationwide’s monthly house price data on Friday will be closely watched after a string of volatile reports. Experts predict prices increased only marginally in December.
Footfall in UK stores was marginally higher this Christmas Eve compared to last year. Retailers were also cheered by forecasts of a strong boxing day, helped by the usual litany of sales as consumers hit shopping centres and scrolled on their phones.
The United States and Ukraine are reportedly getting closer to a draft agreement that would end the war with Russia. It’s still unclear if Moscow would agree to the proposals, but President Zelenskyy still put in the air miles to fly to meet his American counterpart in Florida this weekend.
But while there was progress in one conflict, the US military announced it had conducted strikes on ISIS targets in Nigeria on Christmas day. Those movements came with intelligence assistance from the Nigerian government following attacks on Christians.
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GBP: Marginal movement
For the pound, Christmas Eve saw marginal movement at most. A range of about 0.2 cents against the euro and the US dollar slowed the momentum from earlier in the week, although that was to be expected given time of year.
GBP/USD: the past year
EUR: From rates to growth
The euro’s bumper year was driven by significant interest rate disparity between the European Central Bank and other major rate setters. As those gaps narrow, analysts expect relative value to be driven more by economic fundamentals like growth, putting more onus on the eurozone economy to step up.
GBP/EUR: the past year
USD: Trump rejects Fed “eggheads”
Action was limited in US dollar markets last week, although we did get another indication that the president’s preference for the next Federal Reserve chair would be someone more dovish. Donald Trump said he didn’t want another “egghead” in the Eccles building, raising more fears of executive influence on monetary policy.
EUR/USD: the past year
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