GBP v EUR prints biggest weekly decline since Jan 2023

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Written by Dan Waterman
March 7th 2025
Are we witnessing a major turning point for the Euro & US Dollar?

As expected this week, the theme has continued for both the USD (getting weaker) and the EUR (getting stronger), although at much wider margins than anticipated.

GBP v EUR has lost nearly 2% this week (that's a cost of £1,700 on a €200,000 purchase), a deep pullback after recovering so strongly last month against the single currency. The question now on everyone's lips is whether the Euro has entered into a 'new normal' after this resurgence or if the currency has tipped into 'overbought' territory?

The Euro has gained over 4% this week on the Dollar, partly because of the huge investor backing into the Euro, but mostly because of USD weakness after the Trump tariffs. This dramatic change of fortunes does only put the pair to November 2024 lows, so not the end of the world, but still a huge blow in particular for US buyers of property in Europe.

The impact of the recent German spending announcement will change ECB monetary policy and probably very soon. This is because it's inflationary, meaning interest rates in Europe cannot go much lower after the latest cut yesterday, due to the expectation that inflation will now rise again in the region. 

Whilst a hold in the near and long term on EU interest rates likely awaits, what the BoE & Fed do will determine whether the Euro strengthens materially from here. But first, we will see if there is to be a pullback next week after this Euro surge and we will find out soon enough if/when the US will place tariffs on Europe (which will see the Euro weaken). 

Across the pond, Donald Trump's unpredictability is undermining confidence in the world's primary reserve currency. The world is watching the US turn inward and we may be about to see a global shift in terms of pretty much everything.

Usually, uncertainty sees the USD gain in value as investors want to keep their assets held in the currency that anchors global finance. However, Trump's erratic behaviour is working against him, the US & USD at the moment and we are seeing China/Yuan and Europe/Euro gain traction. 


Friday forecast unveiling for Q1


Every Friday in the last month of a quarter, we will publish the forecasts of 5 top investment banks (that are trading the highest volume of currency) and myself on where we all expect to see GBP v EUR to finish that quarter.

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