Published: 07/02/2025 By ECAP
The British Pound fell significantly after the Bank of England lowered interest rates and revised its growth forecast downward. Inflation expectations were also adjusted upward, raising concerns about stagflation. As a result, investors increased expectations for further rate cuts. Ultimately, the pound’s drop marked its largest decline in weeks, reflecting the challenging economic outlook in the UK.
The Euro gained strength, supported by expectations of a cautious but steady economic recovery in the Eurozone. In fact, analysts foresee the Euro maintaining its positive momentum due to the European Central Bank's careful approach to monetary policy. Growth prospects for the region are improving, and inflation trends are expected to remain key drivers, allowing the Euro to continue its upward trajectory against other currencies in the near term.
The U.S. Dollar steadied ahead of the release of nonfarm payrolls data, which investors expected to show strength in the labour market. Despite mixed signals from President Trump on trade tariffs, the dollar index remained stable, though it experienced some losses for the week. Ultimately, a robust labour market gives the Federal Reserve room to maintain interest rates, which could exert pressure on other currencies.
Data supplied by GC Partners