Published: 07/01/2025 By ECAP
The British Pound struggled during yesterday’s trading session after the UK's December services PMI was revised down, indicating slower growth in the vital services sector and a concerning decline in employment. Ultimately, this weak data raised concerns about the UK economy's outlook and whether the Bank of England might need to cut interest rates more aggressively.The Euro edged slightly higher, driven by stronger than expected inflation data from Germany, which saw inflation rise from 2.2% to 2.6%. In fact, this could reduce expectations for further interest rate cuts by the European Central Bank. However, the Euro's gains were capped by weak Eurozone PMI figures, showing continued contraction in the private sector, despite slight improvements in the services sector's performance.
The U.S. Dollar steadied after recovering most of its overnight losses, boosted by speculation over U.S. President Trump's tariff plans. Moreover, the greenback's recent rally was driven by expectations of a slower pace of interest rate cuts from the Federal Reserve in 2025. Ultimately, the dollar index rose slightly, with traders awaiting key U.S. employment data on Friday to gauge the strength of the economy and labor market.
Data supplied by GC Partners