Whats the outlook for the markets in 2025?
Firstly, looking back to 2024, we saw one of the most politically driven markets on record with more than 60 countries worldwide heading to the polls. This political uncertainty created a mixture of volatility and fear with a variety of Banks forecasting completely different ends of the spectrum.
As we move into 2025 , the political agenda will notch up a gear with the likes of the Trump administration implementing their policies such as the tariff plan which will weigh on expansion in both China and Europe slowing down activity. The impact of the tariffs are unknown but the import duties will most likely be aimed at certain sectors/countries such as China, Mexico, Canada and the EU. However, looking back to Trumps first term, he used these threats of tariffs to renegotiate terms with counterparts to aid the US in receiving more income so that they could deliver on their tax cuts.
In addition to the above, Kier Starmer’s budget will be coming into full force from April, businesses and investors will start feeling the pinch with both Employers NI set to rise as well as CGT. Tax increases to National Insurance and Capital Gains Tax are significant measures and their effects on the economy will be felt across the country. Some of the UK’s biggest employers have individually voiced their concerns but over 81 large retailers have teamed up to provide a signatory letter outlining the rise in costs will inevitably mean they will need to cut their workforce, therefore increasing the unemployment rate in the UK. Some of these retailers include Aldi, Asda, Boots, Currys, John Lewis, Lidl, Marks & Spencer, Primark and Sainsbury’s.
As shown below, the range of forecasts vary quite greatly but the below outlines the growth we could potentially see which has been forecasted by some of the leading Banking providers between Q1 to Q4 2025:
GBP/USD – Q1 1.21 – Q4 1.32
GBP/EUR – Q1 1.17 – Q4 1.25
