The 2024 FX space was driven by gradual interest rate cuts, variable economic data, geopolitical flashpoints and some interesting political developments both sides of the Atlantic!

After a quiet start to the year, volatility increased throughout the year as the timing and future pace of cuts diverged between the central banks, Trump won the US election, and both France and Germany suffered political woes.

Sterling

Sterling had its day in the sun over the summer, striding higher on a new ‘fiscally responsible’ government, solid economic growth data and the Bank of England fairly resistant to cutting rates. Some members of the Monetary Policy Committee remain concerned over the stubbornness of wage/service sector inflation, which has been a core facet of the bank’s slight reticence to cut rates. Despite this markets are still expecting three 0.25% rate cuts in 2025.

EURGBP (down 5.04%*) – After trading sideways in a tight range for the whole of H1 2024, price action slumped in the latter part of the year as the UK outperformed the eurozone in terms of economic data, remained more politically stable, and less exposed to the pending Trump tariffs than Europe. Looking ahead to 2025, the ECB looks likely to cut rates more aggressively than the BoE.

Dollar

The dollar weakened through the summer, as some US economic data deteriorated, and the Fed suddenly became one of the most eager central banks to cut rates, culminating in a larger 0.5% rate cut at the September meeting. However, the dollar recovered aggressively over the Autumn, driven by a bullish trifecta of ‘Trump trades’, a less dovish Fed and improving economic data.

EURUSD (down 4.99%*) – The Trump election win drove the dollar higher on the expectation of inflationary themes in the US. At the same time, the euro was weighed down by disappointing PMI data, a spluttering German economy and markets expecting a more aggressively dovish response from the ECB into 2025.

Swiss Franc

As the Japanese yen has lost some of its safe haven appeal, the Swiss franc has been a net beneficiary. While the franc has made solid gains against the euro for much of the year, the end of 2024 sees levels equal to those at the start of the year, with the Swiss National Bank cutting rates and willing to engage in currency intervention to tackle currency strength.

EURCHF (down 0.17%*) – The Swiss franc made solid gains through the summer, attractive as a ‘safe-haven’ play for those concerned over geopolitical developments. The euro clawed back some ground in the last quarter of 2024 as the Swiss National Bank cut rates again, with a larger 0.5% cut in December.

^{* (percentages as of 12 December 2024)}

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