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Forex and Interest Rate Outlook - February 2025
- Global economy has proven to be robust over the past year despite ongoing geopolitical uncertainty, but risks still tilted to the downside.
- US growth increasingly imbalanced towards AI investment, with labour market weakening.
- Fed and Bank of England on hold at first meetings of the year, but set for further cuts while the ECB sits on the sidelines. Bank of Japan plotting further modest hikes.
- Dollar set for further modest weakening. Geopolitics, Fed independence and conditions in the labour market remain to the fore in 2026.
- Further modest upside for the euro, while sterling could remain on the defensive amid political uncertainty, and Bank of England policy easing.
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