Supportive Data
GBP: The British Pound fell to a 19-month low against the Euro last week but may recover if UK inflation data comes in strong. However, Sterling gained against the U.S. Dollar as markets reacted to uncertainty over US trade policy and leadership credibility. Ultimately, analysts suggest the Pound could continue to strengthen in the short term, especially if upcoming UK data supports a more hawkish stance from the BoE.
EUR: The Euro strengthened last week as investors sought safe-haven assets amid US-China trade tensions and a weakening US Dollar. Support also came from political stability in Germany. However, the rally may be short-lived if the ECB follows through with an expected rate cut on Thursday and signals a more cautious monetary outlook. Ultimately, a rising Euro could hurt the EU, prompting the ECB to adjust its policy stance accordingly.
USD: The U.S. Dollar weakened sharply last week due to escalating trade tensions with China, erratic policy shifts from President Trump, and concerns over Federal Reserve independence. Moreover, a 90-day tariff suspension and soft inflation data fuelled speculation of interest rate cuts. Ultimately, analysts warn that continued policy uncertainty could deepen the Dollar’s decline in the near term.
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