UK: Weekly FX Market Update 5 May 2025
GBP
Sterling had a good week, with GBPUSD making new high levels not seen since 2022, and GBPEUR is recovering from its April low.
The UK is due to sign a cooperation agreement with the EU on May 19th and a trade deal with the US, potentially by July 8th.
Bloomberg analysts expect the Bank of England cut rates by 0.25% to 4.25%.
US Investment House Morgan Stanley suggests the Bank will cut rates by 0.25% at each of its next five meetings. Will this take the shine off the Pound?
EUR
EURUSD slipped lower last week, possibly on positive tariff news between China and the US.
Eurozone Flash Core CPI showed inflation skipping higher at 2.7%. Will this give the ECB cause to slow its rate cut programme?
EU negotiators will present trade proposals to the US this week. Can they agree a deal in principal and avoid US tariffs?
USD
US jobs data continues to show strength, however, they are the last data release from before the effects of the tariffs are known.
Chinese State Media says that there is ‘no harm’ in holding trade talks with the Trump administration.
The Federal Reserve sets interest rates on Wednesday. If they don’t cut rates, what will President Trump do?
Main events for this week:
Mon May 5
15:00 USD ISM Services PMI
Tue May 6
08:35 CHF SNB Schlegel Speaks
09:00 EUR Final Services PMI
09:30 GBP Final Services PMI
13:30 USD Trade Balance
Wed May 7
09:30 GBP Construction PMI
19:00 USD FOMC Interest Rate Decision/Statement
19:30 USD Fed Chair Press Conference
Thu May 8
07:00 EUR German Industrial Production/German Trade Balance
12:00 GBP Bank of England Interest Rate Decision/Summary
13:30 USD Unemployment Claims
Fri May 9
09:40 GBP Bank of England Bailey Speaks
11:15 USD FOMC Barr Speaks
16:30 USD FOMC Williams Speaks
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