Monthly Report

Garton Global | Monthly Market Digest

Sterling entered February on the back foot as renewed political uncertainty and a split Bank of England vote reinforced expectations of faster UK rate cuts amid softer growth and cooling inflation. Globally, the US dollar strengthened as resilient activity and sticky price pressures pushed Treasury yields higher, curbing imminent Federal Reserve easing bets, while AUD and NZD advanced on rising expectations of further rate increases in Australia and New Zealand. March brought a geopolitical jolt as escalating Iran-US tensions lifted oil and gold, supported the dollar through haven flows and kept sterling capped as policy divergence widened.

Check your positioning and speak to the Garton Global team today.

LAST MONTH: FEBRUARY

🇬🇧Sterling slips as UK political risk returns and BoE easing bets build

• GBP/EUR slipped after Labour’s Gorton & Denton by-election loss revived leadership uncertainty around Sir Keir Starmer, lifting the UK risk premium in FX.
• Rate-cut expectations strengthened as the BoE’s 5–4 hold at 3.75% signalled a March move is increasingly likely amid softer growth and cooling inflation.
• Market impact: GBP/EUR fell from 1.1606 (4 Feb) to ~1.1417 (27 Feb), while GBP/USD eased from 1.3721 to ~1.3485 over the same period.

🇺🇸US dollar strengthened as firm data curbed rate-cut bets

• US dollar strengthened as resilient growth and sticky inflation reduced expectations of an imminent Federal Reserve rate cut, pushing Treasury yields higher.
• Markets repriced policy expectations, with traders scaling back near-term easing bets as economic momentum proved more durable than anticipated.
• Trump’s tariff reversals added policy uncertainty, but yield support dominated, keeping the dollar underpinned against major peers.

🇦🇺AUD and NZD surged as rate-hike expectations gathered pace

• AUD and NZD surged around 10% since the start of the year as markets priced in renewed monetary tightening in Australia and New Zealand.
• Stronger inflation signals prompted investors to anticipate further rate increases, widening yield differentials in favour of both currencies.
• Market impact: Higher expected policy rates supported capital inflows, lifting AUD and NZD against lower-yielding peers.

THIS MONTH: MARCH

🇺🇸Oil, gold and the dollar moved sharply as Iran–US conflict elevated geopolitical risk

• Oil rallied more than 10% as the Iran–US conflict and threats to shipping through the Strait of Hormuz heightened supply disruption concerns, lifting crude across benchmarks.
• Precious metals also climbed as investors sought safe-haven assets amid conflict-driven uncertainty and broader market volatility.
• US dollar strengthened on risk-off positioning and flows into haven currencies and Treasuries, offsetting some gold gains despite elevated global tensions.

🇬🇧Global rates diverged as UK easing prospects contrasted with steady US policy

• US rates held firm as resilient growth and sticky inflation reduced the likelihood of near-term Federal Reserve cuts, keeping Treasury yields elevated.
• UK policy leaned dovish after a closely split Bank of England vote signalled rising support for easing amid softer activity and cooling inflation.
• Market impact: Yield differentials favoured the dollar, while sterling remained capped as investors priced a faster UK cutting cycle.

Have a great month,
The Garton Team.