Policy Uncertainty
The British Pound eased after recent gains as investors awaited government economic plans, with fiscal uncertainty and cautious Bank of England expectations weighing.
The Euro weakened after softer inflation curbed interest rate expectations, while mixed economic data could keep the currency directionless this week.
The U.S. Dollar weakened as softer jobs data and slowing growth expectations increased pressure, reducing prospects of further Federal Reserve rate hikes.
GBP: The British Pound has eased slightly after a strong run, as investors took profits following recent gains. Confidence has been supported by expectations of political change in the UK, but attention is now turning to the new government’s economic plans. Analysts say uncertainty over tax and spending decisions, along with expectations that the Bank of England may take a more cautious approach, could weigh on the Pound over the coming months.
EUR: The Euro came under pressure last week after weaker than expected inflation reduced expectations for further interest rate increases. Although the single currency recovered some ground towards the end of the week, it still finished lower overall. Looking ahead, German factory orders could provide support, but weaker retail sales and slowing industrial production may limit gains, leaving the Euro without a clear direction.
USD: The US Dollar weakened after weaker than expected jobs data fuelled expectations that the Federal Reserve may be less likely to raise interest rates. Softer economic data and cautious comments from policymakers also weighed on the currency. Investors are now watching upcoming US economic reports, with further signs of slowing growth likely to keep pressure on the Dollar in the near term.
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