Published: 05/09/2025 By ECAP
FAIR VALUE
The British Pound strengthened after UK retail sales rose 0.6% in July, beating the 0.3% forecast. This provided short-term support, pushing GBP higher against both the Euro and Dollar. Despite a weaker annual growth figure, the monthly data helped offset recent losses. However, concerns around the upcoming November Budget and consumer caution continue to weigh on sentiment, limiting the potential for a sustained rally in the Pound.
The Euro struggled for direction after Eurozone retail sales fell by 0.5% in July, missing expectations and raising concerns about consumer demand. While the euro gained slightly against risk-sensitive currencies in a cautious market mood, it lost ground elsewhere. Investors now await key Eurozone GDP data, with the currency consolidating against the Dollar and Pound, lacking strong momentum amid limited fresh Eurozone economic catalysts.
The U.S. Dollar weakened as markets increased bets on a Federal Reserve rate cut, driven by soft labour data and slowing job growth. In fact, the dollar index slipped 0.2%, while investors awaited today’s nonfarm payrolls report for further confirmation. Despite this dip, Bank of America noted the Dollar is nearing fair value after years of overvaluation, though structural factors suggest potential for further gradual weakening over time.
Data supplied by GC Partners