Reaffirmed Fragility
GBP: The British Pound remained relatively steady this week despite data confirming the UK’s sluggish economic recovery. August GDP rose by just 0.1%, matching expectations, while July’s figure was revised lower. This reaffirmed the fragility of the UK’s economy, but the absence of surprises helped Sterling avoid further losses. With limited domestic data releases, the Pound’s short-term direction will hinge on Bank of England commentary and broader global sentiment.
EUR: The Euro saw modest gains this week, supported by expectations of persistent inflation within the Eurozone and relative political stability in France. However, weak trade balance data, with the surplus plummeting from €12.7 billion to €1 billion, cast a shadow on the currency’s momentum. Markets are closely watching upcoming CPI figures, with higher-than-expected inflation potentially deterring early ECB rate cuts and offering the Euro a possible boost heading into year-end.
USD: The U.S. Dollar faced notable pressure this week as market expectations for additional Federal Reserve rate cuts grew stronger. Dovish comments from Fed Chair Jerome Powell, along with signs of economic softening from the Fed’s Beige Book, fuelled speculation of further monetary easing. Moreover, trade tensions with China and a prolonged government shutdown added to the dollar’s headwinds, pushing the greenback to its weakest weekly performance since mid-July.
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