Published: 06/01/2025 By ECAP
The British Pound weakened significantly against the Dollar at the start of the new year, driven by rising energy costs. In fact, UK wholesale gas prices surged to their highest since January 2023, adding to economic pressures from tax increases and wage hikes. Ultimately, analysts warn that the UK's reliance on imports leaves it vulnerable to market volatility, contributing to a sharp drop in GBP/USD exchange rates.The Euro fell against the Dollar in early 2025, impacted by rising energy prices, particularly natural gas. In fact, a sharp rise in gas prices and the cold winter season worsened pressure on the Eurozone’s economy. Despite some positive economic data, the Euro remains vulnerable, with EUR/USD nearing its lowest levels since November 2022. Ultimately, analysts expect further weakening due to the European Central Bank’s likely interest rate cuts and continued inflationary pressures.
The U.S. Dollar is benefiting from rising energy prices, particularly natural gas and oil, which favor the Dollar due to its connection to global energy exports. In fact, analysts predict the Dollar's strength will continue, as lower investments in the greenback and increasing demand may fuel its rally. Looking forward, the US job report for December is expected to show strong growth, which would further support the Dollar's upward momentum.
Data supplied by GC Partners