Modest Pressure
GBP: The British Pound weakened against both the Euro and Dollar after UK GDP flatlined in July, signalling slowing economic momentum. Quarterly growth fell to 0.2%, the weakest in six months. Investors remain cautious ahead of November’s budget, amid talk of tax hikes. Ultimately, Sterling’s earlier strength has faded, and limited UK data has kept the currency subdued despite a recent hawkish tone from the Bank of England.
EUR: The Euro held firm and gained against several major currencies after the European Central Bank left interest rates unchanged at 2.15%, as expected. The ECB’s data-driven approach and an upgrade to its 2025 growth forecast from 0.9% to 1.2% supported the bloc’s single currency. Ultimately, broader confidence in the eurozone outlook helped the Euro remain resilient during yesterday’s trading session.
USD: The U.S. Dollar traded slightly weaker as inflation data came in line with expectations, reinforcing market bets on a 25-basis point Fed rate cut next week. Core CPI held at 3.1%, while labour market data showed softness. The dollar index dipped 0.2% on the week. Ultimately, despite sticky inflation, investors expect rate cuts to support the job market without reigniting inflationary pressures, keeping the greenback under modest pressure.
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