UK: Weekly FX Market Update 17 March 2025

GBP

• Last week ended on a sour note for the pound, with monthly GDP falling by 0.1% in January. Is PM Starmer too busy with Ukraine and US tariffs to focus on the UK economy?

• The BoE sets rates on Thursday with market analysts expecting no change from the ‘Old Lady’.

• If US tariffs and Ukraine peace talks dominate another week, can GBPUSD trade above 1.3000 due to possible further US Dollar weakness?

EUR

• President Trump is threatening 200% tariffs on European Union (EU) alcohol exports in response to the EU tariffs of 50% on US whisky.

• European Commission Vice-President Kallas says that they have no interest in a trade war but will defend their interests when needed.

• German to-be Chancellor Merz has agreed to a deal with the Greens to push through up to Euro 1 trillion worth of defence and infrastructure spending.

USD

• The S&P 500 is down 8% from its highs and the Nasdaq is over 10% down, with the Financial Times putting the weakness down to US tariffs.

• The US Dollar has weakened around 8% since January as well.

• JP Morgan are calling President Trumps tariffs on Canada “economically, politically and geologically illiterate”.

• Following both the EU and Canada co-ordinating placing tariffs on the US, will this encourage more US Dollar volatility?

Main events for this week:

Mon Mar 17

12:30 USD Retail Sales

Tues Mar 18

10:00 EUR ZEW Economic Sentiment

12:30 USD Housing Starts/Building Permits

13:15 USD Industrial Production/Capacity Utilization

Wed Mar 19

05:00 JPY Bank of Japan (BoJ) Policy Rate

05:30 JPY BoJ Press Conference

10:00 EUR Final CPI

18:00 USD Federal Reserve Policy Rate

18:30 USD FOMC Press Conference

Thu Mar 20

00:30 AUD Employment Data

07:00 GBP Employment Data

08:30 CHF Swiss National Bank Policy Rate

12:00 GBP Bank of England (BoE) Policy Rate

12:30 GBP BoE Gov Bailey Speaks/Unemployment Claims

14:00 USD Existing Home Sales

Fri Mar 21

07:00 GBP Public Sector Net Borrowing

13:05 USD FOMC Williams Speaks.