Global Watch May 2025 - Bank of Ireland Corporate

The new US administration’s trade policy has resulted in heightened uncertainty and declining consumer and business sentiment, while also denting investor confidence in US assets. Increased tariffs will result in lower growth and higher inflation in the US, and will dampen growth in the Euro area and UK economies. The Fed is likely to stay on hold for now before resuming cutting interest rates later this year. We are pencilling in a 100bps reduction by the first quarter of 2026. We expect the ECB and Bank of England to lower rates further – by 75bps – over the next 6-9 months. The dollar has fallen by 5% on a trade-weighted basis since peaking in January and is likely to remain under pressure absent a marked dialling down of trade tensions. We see EURUSD and GBPUSD trading in ranges of $1.10-$1.20 and $1.30-$1.40 respectively, with EURGBP in a range of £0.82 to £0.87

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Bank of Ireland_Global Watch_May 2025

Written by: Michael Crowley