UK: Weekly FX Market Update 22 April 2025
GBP
BoE Gov Bailey says that the Bank must ‘take seriously’ the risk to growth from US tariffs.
Bloomberg analysts fully price in a UK rate cut on May 8th.
UK PMI data contracts at the fastest rate in two years.
Which will be weaker moving forward? The pound, based around rate cut expectations? Or the Dollar due to the ongoing tariff angst?
EUR
ECB President Lagarde thinks that tariffs are probably more disinflationary than inflationary.
The IMF says that the Eurozone economy will only grow by 0.8% in 2025, rather than the 1% they had previously forecast.
What will Eurozone Flash CPI data show on Friday?
USD
The Wall Street Journal reports that tariffs on China could be cut by 50% down to 65%.
US Treasury Secretary Bessent quickly added that there was no unilateral offer to cut tariffs from President Trump, adding to the confusion amongst the US administration.
FOMC Governor Waller says he could support rate cuts if there’s a significant rise in unemployment.
Goldman Sachs forecasts a 25% to 30% decline for the US Dollar. They see a possible recession as ‘inevitable’ if reciprocal tariffs are levied, if the US-China trade war continues, or if there are further aggressive goods-specific tariffs.
The market will look to the US employment report on Friday for direction. A weak number could encourage recession fears and a weaker US Dollar, whilst a strong report could see US equity and US Dollar strength as the labour market shrugs off trade concerns.
Main events for this week:
Mon Apr 28
11:00 GBP CBI Realized Sales
Tue Apr 29
07:00 EUR German prelim CPI
10:40 GBP MPC Ramsden Speaks
15:00 USD Consumer Confidence
Wed Apr 30
02:30 AUD CPI
13:30 USD Advance GDP
15:00 USD Core PCE Price Index
Thu May 1
05:00 JPY Bank of Japan Interest Rate Decision
05:30 JPY BoJ Press Conference
13:30 USD Unemployment Claims
15:00 USD ISM Manufacturing PMI
Fri May 2
10:00 EUR CPI Flash Estimate
13:30 USD Non-Farm Payrolls/Average Hourly Earnings/Unemployment Rate
About the author
