Calming Politics?
The British Pound rebounded as UK political tensions eased, boosting confidence despite weak economic data and concerns over rising energy-driven inflation.
The Euro weakened as poor Eurozone business activity data fuelled growth concerns, while investors awaited inflation and confidence figures for direction.
The U.S. Dollar fluctuated amid geopolitical tensions and inflation concerns, with Federal Reserve caution supporting expectations of prolonged higher interest rates.
GBP: The British Pound recovered strongly last week as political tensions in the UK eased and confidence improved around the government’s stability. Investors were encouraged by calmer financial markets and reduced uncertainty surrounding Prime Minister Keir Starmer. The British Pound held firm despite weaker UK data on jobs, inflation, business activity and retail sales, as markets focused more on political developments and the possibility that rising energy costs could keep pressure on prices.
EUR: The Euro struggled last week as concerns about the Eurozone economy deepened. Weak business activity data increased fears that growth across the region is slowing, particularly after both manufacturing and services sectors disappointed expectations. With few supportive economic updates elsewhere, sentiment toward the single currency remained subdued. Investors are now watching upcoming inflation and confidence figures closely for signs of whether economic conditions and price pressures may begin to improve.
USD: The US Dollar had a mixed week as investors reacted to tensions in the Middle East and changing expectations around US interest rates. Demand for the Dollar rose when markets became more cautious, but eased as confidence improved later in the week. Minutes from the Federal Reserve suggested policymakers remain concerned about inflation, which could keep borrowing costs higher for longer and continue supporting the Dollar in the near term.
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