Risk Sensitive
GBP: The British Pound weakened against major currencies as softer than expected UK inflation data increased expectations of a Bank of England interest rate cut in May. In fact, inflation fell to 2.6% in March, below the 2.7% forecast. Despite gains against the struggling US Dollar, GBP lacked direction due to absent UK economic data and global risk concerns. Ultimately, market sentiment may further pressure the risk-sensitive Pound.
EUR: The Euro held firm as investors anticipated the European Central Bank’s upcoming rate decision, with a 25-basis point cut already priced in. In fact, focus shifted to the ECB’s forward guidance amid EU-US trade tensions. A risk-off mood and the Euro’s negative correlation with the weakening US Dollar supported demand. However, dovish signals from ECB President Lagarde could weigh on the Euro’s outlook.
USD: The U.S. Dollar remained volatile amid Fed Chair Jerome Powell’s comments ruling out near-term rate cuts, reinforcing a cautious monetary stance. Despite a brief rebound, the Dollar Index stayed near a three-year low. In fact, uncertainty from President Trump’s erratic tariff policies and escalating U.S.-China tensions fuelled investor concerns, pressuring the Dollar. Ultimately, fears of a U.S. recession and weak inflation expectations further dampened market confidence in the greenback.
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