EUR Under Pressure – The euro remains weak heading into the weekend.

Key Headline:

• US GDP Surprises to the Upside – Stronger-than-expected economic growth signals resilience in the US economy.
• EUR Dips – The euro weakens as markets anticipate further rate cuts from the European Central Bank.
• Market Reaction – Investors adjust positions, with potential implications for forex and bond markets.
• Rate Policy Divergence – The Fed’s stance remains uncertain, while ECB rate cuts seem more likely.

Recap

US GDP Revised Higher  – Third estimate at 2.4%, up from 2.3%, following a 5.9% surge in corporate profits (biggest gain in over two years).

USD Sell-Off at 4PM Fix – Despite positive economic data, the dollar weakened, driven by a Deutsche Bank report raising concerns over the Fed’s commitment to dollar liquidity.

Global De-Dollarization Concerns – Uncertainty over USD swap lines could accelerate efforts by other countries to reduce reliance on the US financial system.

Short-Lived Market Reaction – The USD sell-off was brief, with markets quickly stabilizing.

GBP Rebounds – Sterling recovered after Wednesday’s dip, mainly due to market positioning rather than fundamentals.

UK Rate Cut Speculation – Traders speculate that a potential Autumn tax hike by the Chancellor could mean markets are underpricing BoE rate cuts.

Today’s Rates

Today's Interbank Rates at 11:40 am against GBP movement.

GBP>EUR – 1.2000

GBP>USD – 1.2925

EUR>GBP – 0.8333

EUR>USD – 1.0772

GBP>CAD – 1.8517

GBP>AUD – 2.0543

GBP>SEK – 13.001

GBP>CHF – 1.1415

GBP>PLN – 5.0193

GBP>AED – 4.7466

GBP>HKD – 10.053

GBP>ZAR – 23.480

Today’s Key Takeaways

• UK Retail Sales Strong – Sales rose 1% in February and 1.4% in January, signaling increased consumer spending.
• Household Spending Up – Disposable income per head rose 1.7% in Q4 2024, suggesting households are dipping into savings.
• GBP Reaction – Sterling saw a brief jump on the positive retail sales data.
• Eurozone Inflation Misses Forecasts – French & Spanish CPI came in lower than expected, increasing expectations for ECB rate cuts.
• ECB Rate Cut Expectations Rise – Markets now pricing in 60bp of cuts this year, up from 50bp at the start of the week.
• EUR Under Pressure – The euro remains weak heading into the weekend.
• Markets in Wait-and-See Mode – A quiet session ahead, with traders focused on Trump’s ‘Liberation Day’ event on April 2.
• Range-Bound Trading Expected – Markets likely to close the week within established ranges.

28th March 2025

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