Published: 04/12/2025 By ECAP
SENTIMENT SHIFTING
The Pound is strengthening into year-end as oversold post-budget conditions reverse, technical momentum improves and global risk appetite lifts demand for UK assets. Upward revisions to services PMI figures and easing inflation pressures have supported confidence, while fading budget-related anxieties reduce earlier undervaluation. Overall, with domestic data quiet, sentiment-driven flows are likely to guide the currency’s continued recovery over the coming weeks as conditions remain favourable.
The Euro showed mixed performance, pressured by geopolitical tensions but supported by stronger than expected services PMI data, which indicated a firmer expansion in activity. Despite these supportive factors, the euro faced overall uncertainty. Upcoming eurozone retail sales figures and speeches from ECB policymakers, including Philip Lane and Luis de Guindos, are expected to guide near-term euro sentiment, with any hawkish signals potentially offering the currency additional support.
The US Dollar has fallen as markets increasingly price in a dovish successor to Federal Reserve Chair Jerome Powell. Expectations of a December rate cut have strengthened, with rapid, aggressive reductions anticipated under the likely new leadership. Reports of a frontrunner’s political alignment and cancelled interviews accelerated selling, as traders bet on looser monetary policy. Overall, inflation data and future Fed decisions remain key factors for USD direction.
Data supplied by GC Partners