Pound slips as OECD slashes UK 2025 growth forecast
Philip McHugh March 18th 2025 - 2 minute read
Pound (GBP) dented by weaker UK growth forecast
The pound (GBP) softened against many of its peers through yesterday’s session, after the Organisation for Economic Co-operation and Development (OECD) slashed its UK growth forecast for the year.
This revived concerns over the UK’s economic trajectory and added to speculation that Chancellor Rachel Reeves may introduce spending cuts when she delivers her Spring Statement next week.
In the absence of any notable UK economic releases, movement in the pound may be driven by wider market trends today.
Euro (EUR) buoyed by Ukraine peace talk hopes
The euro (EUR) firmed on Monday amid the cautious optimism surrounding proposed Ukraine peace talks between US President Donald Trump and Russian President Vladimir Putin.
The upside in EUR exchange rates was also supported by the single currency’s negative correlation with the US dollar (USD).
Germany’s latest ZEW economic sentiment index will be the focus for EUR investors today. Expect the euro to strengthen if the country’s new defence and infrastructure spending plans helped boost sentiment this month.
US dollar (USD) subdued as retail sales miss
The US dollar struggled at the start of this week as the latest US retail sales figures fell short of expectations.
The lacklustre rebound in consumer spending reinforced recent fears that the US is set to slip into a recession in the first half of the year.
Looking ahead, movement in the US dollar may prove limited today, as USD investors brace for the Federal Reserve’s interest rate decision on Wednesday.
Canadian dollar (CAD) firms as oil prices rise
The Canadian dollar (CAD) trended broadly higher on Monday as the appeal of the commodity-linked currency was underpinned by an appreciation of oil prices.
Canada will publish its latest consumer price index later today. February’s index is expected to report an acceleration of inflation, which may lead to a trimming of Bank of Canada (BoC) rate cut bets and help to strengthen the ‘loonie’.
Australian dollar (AUD) pressured by geopolitical tensions
The Australian dollar (AUD) weakened overnight on Monday as renewed tensions in the Middle East saw investors shy away from risk-sensitive assets like the ‘Aussie’.
New Zealand dollar (NZD) pressured by risk-off flows
The New Zealand dollar (NZD) also faced headwinds in overnight trade amid the negative shift in market risk sentiment.
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Written by
Philip McHugh