In anticipation of poor employment data and an increased chance of a large interest rate cut next week, the dollar plunged against other currencies on Monday. USD lost more than 0.5% on both the pound and the euro. By day’s end, sterling was ahead of the EUR, too, though there was only a hair in it.
The pound remained calm through Monday, remaining largely level with the euro and other competing currencies. This is despite the weekend’s dramatic government reshuffle.
With no major data releases planned for this week, a steady pound suggests the traders are happy with the shape of the new cabinet – or, at least, don’t see it as impacting the UK’s economic prospects (for good or ill).
This afternoon, the US’s Bureau of Labor Statistics (BLS) will publish revised jobs data for the period between April 2024 and March 2025. Following last week’s poor jobs data, analysts predict a significant downward revision in US employment. If the BLS reveals a struggling jobs market, the US Federal Reserve will be under even greater pressure to make a large interest cut when it meets next week.
As the odds of an interest rate cute increase, the market for dollars has decreased; leading to yesterday’s 0.5% decline against other currencies.
Like the pound, the euro remained steady on Monday, ending slightly down on sterling when the markets closed. However, last night French Prime Minister François Bayrou lost his confidence vote, forcing his resignation. This will also make it hard for any successor to push through Bayrou’s debt reduction plan, or any proposals like it.
We are likely to see the impact of the French government’s collapse reflected in the euro today.
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 account manager on 020 7898 0541 to get started.
