FX Report: 21st - 24th April 2025
Buy Side Target
1.3500
Sell Side Target
1.2850
Current Price
1.3345
Price has achieved both 1.3210 and 1.3350 mid-term targets on the upside. While the bullish momentum is strong, the move upwards has been quite unstable. There remains control from the 1.2700 region, but we are yet to see value be found. Once value has been found this move may continue to be more sustainable. The next regions of target are around 1.3360 and 1.3500 respectively.
United Kingdom: Economic Resilience and Monetary Policy Outlook
Improved Economic Indicators: The UK economy showed signs of recovery, with GDP rising by 0.5% in February, inflation decreasing to 2.6% in March, and retail sales increasing by 0.4%. Additionally, real wage growth outpaced inflation for 21 consecutive months, indicating strengthened household finances.
Bank of England's (BoE) Stance: Despite the positive data, the BoE maintained a cautious approach. While some policymakers hinted at the possibility of future rate cuts, others emphasized the need to monitor inflation trends closely before making decisions.
Political Endorsements: Chancellor Rachel Reeves received endorsements from major financial figures, including JPMorgan CEO Jamie Dimon, who praised the UK's pro-growth agenda and commitment to market stability. Such endorsements bolstered investor confidence in the UK's economic direction.
United States: Economic Contraction and Trade Policies
Unexpected GDP Contraction: The U.S. economy contracted by 0.3% in Q1 2025, marking the first decline since early 2022. This downturn was primarily due to a 41.3% surge in imports as businesses rushed to stockpile goods ahead of impending tariffs introduced by President Trump's administration.
Inflationary Pressures: The Personal Consumption Expenditures (PCE) price index, the Federal Reserve's preferred inflation gauge, rose to 3.6%, exceeding the Fed's 2% target. This increase complicates the central bank's potential plans for rate cuts.
Labour Market Concerns: April's ADP private payrolls report showed an increase of only 62,000 jobs, significantly below expectations and indicating a potential slowdown in job creation.
Trade Tensions: President Trump's introduction of new tariffs, including a 10% blanket tariff and a 145% tariff on Chinese goods, heightened trade tensions. These measures contributed to market volatility and raised concerns about potential stagflation—a combination of stagnant economic growth and high inflation.
Last FX Report: 14th - 17th April 2025
Buy Side Target
1.3350
Sell Side Target
1.2620
Current Price
1.3100
Market Outcome
Bullish
Understanding that selling pressure was week, price continued to rally up to our mid-term targets of 1.3210 and 1.3350. This allowed us to capitalise on all buying opportunities presented on a daily basis, understanding that the strong momentum discouraged deeper pullbacks until the mid-term targets had been met.
*Contracts for difference (CFDs) are complicated financial contracts based on leverage, which can possibly result in huge fluctuations in profits or losses. Therefore, it is essential to study and understand CFDs thoroughly before embarking on investment. You should at the same time stay conscious and ready yourself for the potential risk of losing a part or your whole capital. This outlook is non-financial advice, you should consult with your personal financial advisor before making any investment decisions.
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