Published: 02/10/2025 By ECAP
STRONG FOOTING
The British Pound opened the fourth quarter on strong footing, lifted by reduced fiscal concerns after the Labour Party avoided any radical economic pledges at their recent conference. International interest in UK equities, especially the FTSE 100’s record performance, also played a role in strengthening sterling. Despite these tailwinds, the Pound was unable to sustain its highs, signalling lingering market hesitance and a need for stronger momentum to confirm a recovery.
The Euro remained broadly steady after Eurozone inflation data met expectations, showing a rise to 2.2% in September. While this marked the highest rate since April, it reinforced market sentiment that the European Central Bank is likely done with its rate-cutting cycle. ECB President Christine Lagarde’s upcoming remarks could influence the Euro further, especially if they confirm the end of easing. Overall, the Euro held firm, supported by stabilizing inflation and cautious optimism.
The U.S. Dollar came under sustained pressure due to a government shutdown, political stalemate, and softer economic data. The shutdown delayed key reports, leaving the Federal Reserve with limited visibility, increasing the chances of a precautionary interest rate cut. Moreover, ADP employment data disappointed significantly, adding to bearish sentiment. The longer the shutdown continues, the greater the impact on business confidence and economic momentum, likely keeping the Dollar on the defensive in the near term.
Data supplied by GC Partners