UK: Weekly FX Market Update 12 May 2025

GBP

• With the UK and US agreeing a trade deal, the USD was supported. This was despite a ‘hawkish cut’ by the Bank of England last Thursday.

• The trade negotiations between China and the US have produced quick agreement and a sharp lowering of tariffs. Will this continue, helping the dollar strengthen?

• UK employment data is released on Tuesday and GDP on Thursday, however, all eyes remain on the US and China trade talks.

EUR

• Chancellor Merz was elected at the second attempt. Investors now consider just how strong the government coalition really is. Will this offer support to the Euro?

• Is the Eurozone next in line for trade talks with the US or further down the President’s agenda?

• Eurozone GDP is released on Thursday.

USD

• Before the weekends US-Chinese trade talks, President Trump acknowledged that tariffs at 145% ‘we know it’s coming down’.

• As a result of the Geneva trade talks between the US and China, the US has cut tariffs to 30%, and China has cut tariffs to 10% for 90 days while they look to agree on a trade deal.

• Will US CPI on Tuesday show the start of higher US inflation keeping interest rates firm? If it does, combined with possible good news around the US China trade talks, will the USD have a good week?

Main events for this week:

Mon May 12

00:00 USD US-China trade de-escalation update

Tue May 13

07:00 GBP Unemployment Rate/Claimant Count Change/Average Earnings

10:00 EUR ZEW Economic Sentiment

13:30 USD CPI

Wed May 14

02:30 AUD Wage Price Index

Thu May 15

02:30 AUD Employment Data

07:00 GBP GDP/Goods Trade Balance/Industrial Production

10:00 EUR Flash GDP

13:30 USD Retail Sales/PPI

14:15 USD Industrial Production/Capacity Utilization Rate

Fri May 16

13:30 USD Housing Starts

15:00 USD Prelim UoM Consumer Sentiment/Inflation Expectations