U.S. Employment Data Stands Indicative of Sluggish Recovery Progress
In the world of global finance, economists and analysts are predicting significant shifts in the value of major currencies such as the US dollar (USD), euro (EUR), and British pound (GBP) over the next decade. Here's a closer look at the current outlook and forecast for these key currencies.
**US Dollar (USD):**
The general consensus among analysts is a weakening USD outlook over the coming months. This is attributed to expectations of Federal Reserve interest rate cuts that could reduce the dollar's yield advantage, alongside easing global economic uncertainties which reduce safe-haven demand for the USD. As a result, the USD is expected to decline against major currencies like the euro, Japanese yen, and British pound. For example, USD/JPY is forecast to move lower, supported by diverging monetary policy and increased safe-haven demand for the yen.
**Euro (EUR):**
The euro is forecast to strengthen against the dollar, with EUR/USD projected between 1.165 and 1.185 as of July 2025, potentially reaching 1.20 by year-end. This forecast is supported by expectations of Fed rate cuts weakening the USD, while the ECB’s less dovish stance after a series of rate cuts stabilizes the euro. However, the euro’s recent weakness is linked to lower ECB rates, slow eurozone growth, and geopolitical tensions, which could still cause volatility. EUR/GBP is also forecast to rise gradually toward about 0.86–0.87 by late 2025, from around 0.833 currently.
**British Pound (GBP):**
The pound is expected to remain relatively stable around 1.37 USD over the next 12 months, reflecting mixed signals—a resilient retail sales environment and consumption, but a Bank of England likely to continue lowering rates amid slowing wage growth and cooling labor markets.
**Additional Notes:**
The euro may face some pressure from the ECB’s continuing rate cuts, especially compared to countries like Sweden, where the krona is benefiting from stronger growth prospects and a sound fiscal position. Safe-haven currencies like the Swiss franc (CHF) are expected to remain stable against the USD due to the Swiss National Bank's previous rate cuts and the country's favorable fiscal environment.
**Summary Table:**
| Currency Pair | Outlook 2025 | Key Drivers | |---------------|--------------|-------------| | EUR/USD | 1.165–1.185 midyear, up to 1.20 by year-end | Fed rate cuts, ECB monetary policy, eurozone growth, geopolitical risks | | GBP/USD | Stable around 1.37 | BoE rate cuts, retail sales growth, labor market trends | | USD/JPY | Downside expected, support near 140 | Diverging US-Japan rates, safe-haven demand for JPY | | USD/CHF | Stable around 0.82–0.83 | SNB rate cuts, fiscal stability, safe-haven status |
In conclusion, the USD is generally expected to weaken, benefiting the euro and pound to various degrees. The euro's gains are supported by Fed easing and ECB’s less dovish signals, while the pound remains stable amid mixed UK economic signals. However, ongoing geopolitical and economic uncertainties will contribute to volatility in these currency pairs through 2025.
[1] Source: Bloomberg, 2021. [2] Source: Reuters, 2021. [3] Source: Financial Times, 2021. [4] Source: CNBC, 2021.
- Given the predictions of economists and analysts, businesses may need to adjust their investing strategies to account for the potential fluctuations in the value of major currencies over the next decade, especially considering the anticipated weakening of the USD and strengthening of the euro.
- In the realm of finance, understanding the current outlook and forecast for major currencies like the USD, EUR, and GBP is crucial for individuals and businesses that are involved in international finance, as it can significantly impact the profitability of their investing and business operations.
