Subdued Markets
GBP: The British Pound traded cautiously as many in the market await Thursday’s Bank of England policy decision, with markets focused on policymakers’ guidance rather than any expected policy change. Uncertainty over the inflation outlook and the Bank’s stance for the second half of 2026 kept investors reluctant to take significant positions. While calmer UK bond markets offered some reassurance, the Pound may remain subdued unless the Bank delivers a more hawkish message.
EUR: The Euro found support as easing geopolitical tensions drove European gas prices lower, reducing concerns over winter energy shortages. Improved German business confidence also boosted sentiment after the latest IFO survey exceeded expectations. With energy markets stabilising and economic optimism improving, the Euro remained underpinned, although broader market sentiment and upcoming Eurozone GDP data are likely to guide its near-term direction.
USD: The US Dollar weakened early in the week as hopes for a Middle East ceasefire reduced demand for safer assets, although it later regained some ground after fresh regional tensions emerged. Looking ahead, an expected improvement in US consumer confidence could offer support. However, market sentiment is likely to remain the main driver, with geopolitical developments continuing to shape demand for the Dollar.
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