Daily currency update
The Bank of England has warned that risks to the UK’s financial stability have increased in 2025, highlighting the potential for a stock-market correction led by highly-valued AI companies.
In its latest assessment, the Bank notes that global financial risks remain heightened, pointing to rising geopolitical tensions, ongoing fragmentation in global trade and financial markets, and mounting pressures in sovereign debt markets.
For currency markets, such warnings typically translate into greater uncertainty and volatility, as investors may shift away from risk-sensitive assets like sterling and move toward perceived safe-haven currencies. This backdrop could influence short-term GBP flows and heighten sensitivity to macroeconomic headlines over the coming weeks.
Key movers
The US dollar stayed on the back foot Tuesday after softer-than-expected US manufacturing data increased expectations of a Federal Reserve rate cut later this month.
With markets now pricing in a more accommodative policy stance, investors shifted away from the dollar, adding downward pressure across major USD pairs and boosting demand for higher-yielding and risk-sensitive currencies.
Expected Ranges
GBP/USD: 1.3175 – 1.3245 ↑
GBP/EUR: 1.1325 – 1.1395 ↓
EUR/USD: 1.1585 – 1.1675 ↑
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