Shifting Sentiment
GBP: The British Pound strengthened after this morning’s GDP data for Q4 2024 exceeded expectations, showing a 0.1% growth. This improved economic performance eased concerns about further interest rate cuts by the Bank of England. The GDP growth was mainly driven by government spending, and analysts predict a 1.5% growth for 2025, which could support a stronger Pound and potentially lead to a recovery in the coming months.
EUR: The Euro fell as market sentiment shifted following weak economic data from Europe. In fact, a significant decline in Italian industrial production added to concerns about sluggish growth in the region. Ultimately, the Euro’s decline reflects ongoing challenges within the European economy, as investors remain cautious amid poor growth figures and uncertainty about the European Central Bank’s future monetary policy.
USD: The U.S. Dollar rose after yesterday’s stronger than expected inflation data for January, signalling persistent inflationary pressures. Consumer prices increased by 3% YoY, with core inflation rising 3.3%. This has raised expectations that the Federal Reserve may delay interest rate cuts. In fact, Fed Chair Jerome Powell emphasized the need to avoid rapid policy changes to manage inflation, indicating that the Fed may adopt a cautious approach in the coming months.
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