How did the pound perform in 2018?

Philip McHugh December 27th 2018 - 2 minute read

Firstly, we hope you all had a fantastic festive period!

As the markets reopen following the Christmas break, GBP/EUR is trading in the region of €1.1114 and GBP/USD is commanding $1.2658. GBP/AUD is fluctuating around AU$1.7943 while GBP/NZD is trading at NZ$1.8837.

With the New Year round the corner, we thought we’d take this opportunity to look back over 2018 and give you a little summary of how the pound, euro and US dollar performed this year…

Pound battered by Brexit concerns

Brexit remained the driving force behind GBP exchange rate movement in 2018.

While it’s been a year of ups and downs, Sterling is set to close out the year trading in a weaker position against both the euro and US dollar.

GBP/EUR Is currently around 2 cents softer than it was on 1 January, while GBP/USD is roughly 9 cents weaker.

The backlash against PM Theresa May’s Brexit deal and concerns surrounding the prospect of a no-deal Brexit have been keeping the pound pressured and limiting the impact of any positive domestic data.

With the UK’s exit from the European Union now less than 100 days away, Brexit headlines will be keeping the pound on its toes heading into the New Year. 

Slowing Eurozone growth limits EUR gains

The euro has been feeling the pressure this year, as signs of slowing growth in the Eurozone and the expectation that the European Central Bank (ECB) won’t be raising interest rates for some time to come took a toll.

The EUR/USD exchange rate slipped steadily over the course of 2018, losing around 6 cents in 12 months.

However, broad-based weakness in the pound helped EUR/GBP close out the year 2 pence stronger.

The euro also derived some end-of-year support from the news that the EU and Italy struck a budget agreement after months of wrangling.

US dollar dominates in risk-off environment

Multiple rate hikes from the Federal Reserve, global economic uncertainties and the threat of a trade war kept the US dollar in high demand this year.

The US dollar gained on all the major currencies over the course of 2018, with USD/GBP gaining 5 pence and USD/EUR climbing 4 cents.

The Fed increased interest rates again in December and it looks as though further adjustments are on the cards in 2019, so US monetary policy will continue having an impact on USD. 

If you want to find out how the major currencies are likely to perform in the year ahead, check out tomorrow’s daily update!

Written by
Philip McHugh

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