April 10, 2025 – Written by Ben Hughes

STORY LINK Pound to Dollar LIVE: Soft Inflation Print Sends Sterling Past 1.29

The US Dollar (USD) lost further ground against the Euro (EUR) and Pound Sterling (GBP) following the latest weaker-than-expected US inflation data.

The Pound to Dollar rate jumped to highs just above 1.2950 before settling around 1.2910.

According to Scotiabank; “Fundamentals are shifting in the pound’s favor as markets pare back their expectations for BoE easing, offering support via wider UK -US spreads.”

It added; “the focus is now on the 1.29-1.30 congestion range that had prevailed through much of March and the first couple of trading days in April. Resistance is expected between 1.31 and 1.32 while support is expected below 1.28.”

The Pound to Euro (GBP/EUR) exchange rate continued to lose ground, however, and retreated to 1.1615 from near 1.1650 ahead of the data with overall Pound confidence still fragile.

US consumer prices declined 0.1% for March compared with consensus forecasts of a 0.1% increase with the year-on-year inflation rate declining to 2.4% from 2.8% and below expectations of 2.5%.

Core prices increased 0.1% compared with expectations of another 0.3% increase with the annual rate slowing to 2.8% from 3.1%.

According to the Bureau of Labor Statistics; “Indexes that increased over the month include personal care, medical care, education, apparel, and new vehicles. The indexes for airline fares, motor vehicle insurance, used cars and trucks, and recreation were among the major indexes that decreased in March.”

The data eased inflation fears to some extent and traders were confident in pricing in at least three Fed interest rate cuts this year.

Goldman Sachs’s Kay Haigh commented; “We expect the Fed’s initial reaction to be cautious, but the risks remain that a sharper than expected slowdown in the economy could result in a resumption of the Fed’s easing cycle.”

According to Scotiabank; “Markets surged in response to the pause news but confidence in US policymaking has been severely dented and markets will remain vulnerable to trade-related headlines while the US and China continue to slug it out.”

It added; “Markets can breathe a sigh of relief but there are still major challenges here.”

There are also still reservations surrounding the UK bond market with the 10-year bond yield traded close to 4.70% from intra-day lows around 4.65%.

According to ING; “any greater slowdown in the UK economy, which would hit revenues/raise welfare spending, would only hit gilts harder. Clearly, then, the gilt market is an Achilles heel for sterling.”

Like this piece? Please share with your friends and colleagues:

International Money Transfer? Ask our resident FX expert a money transfer question or try John’s new, free, no-obligation personal service! ,where he helps every step of the way,
ensuring you get the best exchange rates on your currency requirements.

TAGS: Pound Dollar Forecasts

April 10, 2025 – Written by David Woodsmith

STORY LINK Euro to Dollar Forecast RAISED to 1.14 in 12 Months at Danske Bank

Since the US tariff policy was unveiled, the Euro (EUR) has been subjected to very choppy trading against the US Dollar (USD).

EURUSD is currently trading at 6-month highs just below 1.12 handle, quoted at 1.11936 (+2.22%).

A move above 1.1280 would be a 3-year high.

Several Investment Banks Slash Dollar Forecasts, New EUR/USD Targets Published

Many investment banks have maintained a bullish stance on the US dollar over the past few months based, to an important extent, on US exceptionalism.

There was talk of EUR/USD sliding to parity, but several key banks have now shifted their view and further forecast revisions are inevitable in the short term.

Nordea, for example, commented; “We have made a complete reversal in our dollar outlook and now expect the dollar to weaken rather than strengthen.”

Goldman Sachs has shifted its view sharply; “We have made a major shift in our Dollar view after seeing the developments of the last few weeks and rethinking the likely implications of these policy changes. We now expect recent Dollar weakness to persist, particularly in DXY terms.”

Goldman has increased its 12-month EUR/USD forecast to 1.20 from 1.02 previously.

Nordea has abandoned its call for a EUR/USD slide to 1.04 and has raised its end-2025 forecast to 1.12 from 1.07.

There has been persistent optimism that the US economy would out-perform Europe with this strength also encouraging further capital flows into US asset markets and maintaining strong dollar demand.

Expectations of Trump Administration tax cuts underpinned US growth hopes while there were also expectations that US trade tariffs would tend to underpin the dollar on defensive grounds.

The dollar index (DXY) hit 2-year highs in early January on a wave of Trump trades, but has since slumped close to 8% to 6-month lows.

Reaction to the aggressive trade policy has been a key element with the dollar weakening rather than strengthening amid the slide on Wall Street.

Scotiabank noted; “An unusual aspect of the recent market volatility is that the USD has fallen in tandem with the sharp decline in US equities. The lack of haven bid for the USD amid the sharp rise in broader market uncertainty and volatility raises a valid question about whether the USD is losing its “traditional” safe-haven status.”

The bond market has also been under sustained pressure.

HSBC delved into the statistics.

It noted; “It is rare to see US 10-year Treasury yields go up, the S&P 500 decline, and the USD struggle.

According to the bank, this has happened less than 7% of times.

HSBC commented that; “it could amplify concerns how a regime shift is unfolding and a bigger USD test is coming via its structural vulnerabilities.”

The bank is less confident in its bullish dollar view; “We have pushed back against such concerns over the years given resilient US growth supporting high yields and solid foreign demand for US assets. Yet, we cannot easily brush aside the USD’s structural weaknesses, especially given the current climate.”

Goldman cited three reasons for changing its view; “the combination of an unnecessary trade war and other uncertainty-raising policies is severely eroding consumer and business confidence. Second, negative trends in US governance and institutions are eroding the appeal of US assets for foreign investors. Third, rudimentary calculations and a constant back-and-forth makes it difficult for investors to price outcomes other than high uncertainty.

Danske Bank expects a notable negative economic impact; “Trump’s tariff proposals are set to significantly increase the weighted average tariff on US imports to levels not seen since the 1920s. Taken together, the tariff measures proposed this year would amount to the largest tax hike on the US consumer since World War II. In our view, this materially increases the risk of a US recession in 2025.”

Danske Bank has raised its 12-month EUR/USD forecast to 1.14 from 1.06.

Scotiabank sees an erosion of defensive support; “The USD’s safe haven status is being eroded as market participants grapple with the aggressive shift in US trade strategy, the implications for its trading partners, and the alternative opportunities available to traditional holders of US Treasuries as a result of changing fiscal attitudes in Europe.”

Nordea focussed on a shift in fiscal policy with attempts to curb US Federal spending. It commented; “The opposite is happening in rest of the world. Europe is focused on increasing military expenditures and public spending.”

Germany has launched a EUR500bn infrastructure plan and a new coalition has been agreed.

Nordea added; “The shifting fiscal policy and economic outlook is in favor of the euro versus the dollar, which is being reinforced by capital flows in the same direction. The rest of the world is overallocated in the US compared to historical average and a normalization will lead to further net dollar sales.”

ING noted an important element of uncertainty; “second-guessing the President’s next move has been a painful process to many, and ultimately we think he will get his way with a broadly weaker dollar, albeit a story for later this year and into 2026.”

The bank will adjust its forecasts shortly and is likely to downgrade dollar forecasts.

According to SocGen; “The global economy’s best hope is that this trade war is short. The alternative outcome is weaker growth for everybody, and a sharp slowdown in capital flows to the US, which would trigger a significant fall for the dollar.”

UBS has a March 2026 EUR/USD forecast of 1.14.

Like this piece? Please share with your friends and colleagues:

International Money Transfer? Ask our resident FX expert a money transfer question or try John’s new, free, no-obligation personal service! ,where he helps every step of the way,
ensuring you get the best exchange rates on your currency requirements.

TAGS: Currency Predictions Euro Dollar Forecasts