Dovish Expectations
GBP: The British Pound advanced as strong wage growth and a steady unemployment rate signalled potential resilience in the UK labour market. Despite modest job losses, signs of stabilization supported sentiment toward Sterling. The Pound also gained from a risk-on market mood, which favoured risk-sensitive currencies. Looking forward, investors are watching upcoming UK inflation and retail data closely, which could influence Sterling’s performance later in the week.
EUR: The Euro weakened amid continuous political instability in France and a broader risk-on market mood that reduced demand for safe-haven assets. Investor sentiment toward the Euro also soured ahead of Germany’s ZEW economic sentiment index, expected to show a sharp decline. Ultimately, with no major economic drivers, the Euro underperformed against several peers, remaining vulnerable to external pressures and softer confidence across the Eurozone.
USD: The U.S. Dollar weakened as markets widely anticipate the Federal Reserve will resume rate cuts, starting with a 25-basis point move this week. In fact, dovish expectations are reinforced by signs of a slowing labour market and soft consumer sentiment. However, despite a risk-on mood pressuring the safe-haven currency, further USD losses may be limited as much of the Fed’s easing cycle is already priced in by investors.
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