Pound Sterling (GBP)

To start off the year, the British Pound experienced a sharp decline against the Dollar, primarily due to surging energy costs. UK wholesale gas prices reached their highest levels since January 2023, exacerbating economic challenges from tax increases and rising wages. Analysts caution that the UK’s heavy reliance on imports heightens its exposure to market volatility, contributing to a significant drop in the GBP/USD exchange rate.

Euro (EUR)

The Euro also weakened against the Dollar in early 2025, pressured by climbing energy costs, particularly natural gas. A notable increase in gas prices and a harsh winter intensified economic strains across the Eurozone. Although some economic indicators have been positive, the Euro remains under threat, with EUR/USD approaching its lowest point since November 2022. Analysts anticipate further declines due to potential interest rate cuts by the European Central Bank and persistent inflation.

U.S. Dollar (USD)

The U.S. Dollar, on the other hand, has gained strength amid rising energy prices, particularly in natural gas and oil, which bolster its position in global energy exports. Analysts expect this upward trend to continue, supported by limited investment in alternative currencies and growing demand for the Dollar. Additionally, the December U.S. jobs report is anticipated to show robust growth, further reinforcing the Dollar’s rally.