Pound Dives vs Euro and Dollar as $2 Trillion Wiped off US Stock Market

April 5, 2025 - Written by Tim Boyer

STORY LINK Pound Dives vs Euro and Dollar as $2 Trillion Wiped off US Stock Market

The Pound closed the week sharply lower against the Euro and Dollar after a historic $2 Trillion was wiped off the US stock market.

GBP/EUR traded at 1.17647 and GBP/USD 1.28936 as fear dominated in global markets with strong demand for safe-haven assets.

The S&P 500 index, for example, posted a 4.8% decline, the sharpest slide since 2020 and there have been widespread losses across all global markets.

The FTSE 100 index lost a further 1.5% on Friday with the index at 11-week lows.

The Yen and Swiss franc are traditional defensive plays and there has been strong demand for both over the past 24 hours.

The dollar posted sharp losses before a limited reversal on Friday, while the slide in risk assets undermined the Pound.

The Euro also posted strong gains in global markets and the Pound to Euro (GBP/EUR) exchange rate lost further ground to 2-month lows near 1.1800 on Friday before settling around 1.1825.


ING notes further solid immediate GBP/EUR support at 1.1800, but any break of this level would risk a slide to 1.1695.

ING commented on Euro gains; “That has nothing to do with a positive re-assessment of eurozone growth prospects. No, the news there is terrible and could get worse should EU trade officials - meeting on Monday in Luxembourg - decide to retaliate. Recall that it's really only the trade blocs of the EU and China which have the economic muscle to retaliate.”

It added; “Instead, we believe it is the alternative liquidity offered by the euro.”

The bank noted; “Remember that if investors don't like the dollar - and the US is the epicentre of the story - then the next most liquid G10 currency is the euro.”

ING also expects that the Bank of England will have to pivot and cut interest rates more aggressively which would undermine Pound yield support.

The Pound to Dollar (GBP/USD) exchange rate surged to 6-month highs at 1.32 on Thursday before a slide to below 1.3000 on Friday with further very volatile trading inevitable.

The dollar outlook will remain a crucial short-term element.


Danske Bank commented; “The broad USD remains highly vulnerable, having now fully erased its post-election gains, as US growth concerns continue to dominate its safe-haven status. The probability of a US recession in 2025 has clearly risen.”

According to ING; “With US equities leading the global losses, only some good news can start to provide some support for equities, US yields and the dollar.”

Chris Weston, head of research at Pepperstone commented; 'Uncertainty' is the word of 2025, and while we now have the tariff rates and the timeline, and Trump and (Treasury Secretary Scott) Bessent have shown some willingness to negotiate, the questions being asked of the market have only increased."

There is an important US release today with the monthly employment report.

Consensus forecasts are for an increase in non-farm payrolls of around 135,000 from 151,000 last month with the unemployment rate holding at 4.1%.

According to Danske; “We expect nonfarm payrolls to come in at 110k, slightly below consensus, and if we're right, a reversal of the current USD selloff is unlikely.”

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TAGS: Pound Dollar Forecasts Pound Euro Forecasts