Four ‘outrageous’ market predictions for 2025
Saxo Bank has published the latest in an annual series of “outrageous predictions” for 2025, from Nvidia trouncing its Mag Seven peers to the US dollar blowing up.
The Danish bank’s predictions for the year, which do not represent its official views, are “meant to spark discussions and challenge consensus” about a changing world.
Here are four of City PM’s favourites.
Sterling erases post-Brexit discount against euro in 2025
Saxo has predicted that pound sterling will have a killer year, rising through 1.27 against the euro to the level it traded at before the 2016 Brexit referendum.
“The UK outlook is as constructive as ever in the post-Brexit era,” said Saxo chief macro strategic John Hardy. “That is, it is the most positive relative to the sick man of Europe, which is, well…Europe, or at least the core Eurozone countries, France and Germany.”
“Fresh fiscal policy winds are blowing in the UK, where the new UK Labour government announced budget priorities ahead of 2025 that avoided the most growth-damaging types of tax hikes on income, while trimming the least productive public sector spending in moving to shrinking its deficits.”
Possible market impacts of the move could include encouraging more domestic investment and a robust growth outlook in the UK, leading to a strong performance for the FTSE 100.
Nvidia valuation balloons to twice the value of Apple
Nvidia has already seen its valuation shoot up to become the second most valuable company in the world, and Saxo thinks it might go higher in 2025.
“With the intensifying AI arms race as no giant or even government wants to be left behind, and as AI data centre electricity costs have soared, the insatiable demand for the more powerful and yet less power-hungry Blackwell chips sees Nvidia taking the crown as the most profitable company of all time,” said Hardy.
This could send Nvidia soaring from its already incredibly high $139 a share price to “well north” of $250, leading the market to question how high it can go. Additionally, regulatory scrutiny is likely to intensify on its monopoly.
Trump 2.0 blows up the US dollar in 2025
In 2025, the new Trump administration is looking to pursue major tarriffs, overhaul the US government’s relationship with the rest of the world, and make massive cuts to government spending while slashing taxes on the rich.
“The implications for the US dollar are dire for trade around the world, as it cuts off the needed supply of dollars to keep the wheels of the global USD system turning, ironically risking a powerful spike higher in the US dollar,” said Hardy.
“Instead, safety valves are found, as global financial actors scramble for alternatives.”
This could lead to the US dollar falling as much as 20 per cent against major currencies and 30 per cent versus gold, Saxo predicted. The move is also likely to empower the crypto market, which Saxo estimated could quadruple as a result.
US imposes AI data centre tax amid power price surge
In 2025, US power prices are expected spike higher in several populated US areas, as the Magnificent Seven tech companies scramble to lock in baseload electricity supplies for their AI data centres.
Saxo predicted that mass outrage at the skyrocketing electricity bills could lead local authorities to slap “huge” taxes and even fines on data centres, in an attempt to keep power prices down.
While markets are already expecting a boom for US investment in power infrastructure, this could cause the trend to accelerate even more.
“Long-term US natural gas prices [could] more than double, a significant contributor to a more inflationary outlook,” added Hardy.