Weekly Market Report

Markets remain cautious as a combination of geopolitical risk and macroeconomic data continues to influence sentiment.

Recent developments in the Middle East are contributing to elevated risk sentiment, with oil prices opening higher to start the week. The US Dollar has found more demand across the board due to it’s safe-haven status due to the market taking a more risk-off approach.

With global risk sentiment changing, the Pound has lacked a strong independent driver which means movements have often been influenced by USD strength/weakness. Recent Eurozone data hasn’t significantly shifted expectations around what direction the ECB will take which has kept the Euro relatively stable for now.

What this may mean for businesses

Geopolitical tensions are having a material impact on exchange rates:

o USD strength due to it’s safe-haven status- which may increase cost for businesses importing from the US, China or paying suppliers in Dollars.

o The market taking a broader risk-off approach – which could potentially lead to less predictable short-term swings.

o Higher oil prices and elevated regional risk may feed into freight, fuel and insurance costs across global supply chains.

o Clients operating on tighter margins may wish to consider whether short-term movements could impact cost forecasting/profitability.