The Euro extends gains across the board

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waterman
Written by Dan Waterman
March 11th 2025
Global stock market performances are surprisingly not filtering into the FX market (yet)..

The Pound has closely followed the performance of the S&P 500 for quite a number of years and was especially seen during the covid pandemic, where it was almost identical. Meaning, when the index went up, so did the value of the Pound in relation mainly to the USD and other safe-haven currencies.

Last year, there was less of a similarity for the first time in over a decade and this year so far, there seems to be no correlation whatsoever. What this means exactly, we are not sure just yet, but it could be significant. 

It could mean that GBP is no longer being seen as an 'emerging currency' that it has been labelled since Brexit. Or it could mean the correlation has been broken for now or for good, because President Trump is changing the rules of the game. Either way, it leaves all with a vested interest in the FX market & GBP exposed.

Usually, the standard playbook has been when global stocks turn deep red, safe haven currencies (USD, JPY, CHF) go hard green. This is because of risk sentiment amongst traders and investors. However, for the first time in my 16-years in the market, this hasn't been the case (for the USD at least). US stocks in particular have fallen off a cliff, but so has the USD..

Another standard playbook is when safe havens get stronger in value, emerging currencies (GBP being the main one) weaken and visa-versa. This strangely does still remain, as the Dollar is injured and the Pound has pounced upon it. 

Then we have the Euro, neither a full safe-haven or an emerging currency. But at this point in time a completely dominant currency over all others. The € surge continues today as news of the Green party in Germany hinting they would be willing to enter a deal with the other coalition parties and agree on a very bullish €500bn fund for German infrastructure.