Published: 08/09/2025 By ECAP
AT A GLANCE
The British Pound saw sharp swings last week, driven by shifting sentiment around UK fiscal policy and cautious signals from the Bank of England.
The Euro gained ground on expectations of steady ECB policy, though uncertainty surrounding French politics remains a potential headwind.
The U.S. Dollar weakened after soft labour market data fuelled expectations of interest rate cuts, with upcoming inflation figures now in focus.
SHARP SWINGS
The British Pound saw significant volatility last week as market sentiment shifted due to concerns over UK fiscal policy and global economic data. After initial weakness, the Pound regained ground following cautious signals from the Bank of England. Investors are now focused on upcoming UK GDP figures, which could influence expectations for interest rate decisions and determine the Pound’s short-term performance against major currencies.
The Euro strengthened last week, supported by expectations that the European Central Bank will hold interest rates steady amid persistent inflation. However, political uncertainty in France, including a likely failed confidence vote for the current government, poses downside risks. Despite this, markets remain relatively calm. Ultimately, the Euro may stay supported if the ECB maintains a steady policy stance in the coming months.
The U.S. Dollar weakened last week as cooling labour market conditions increased expectations of Federal Reserve interest rate cuts. Despite early strength from safe-haven demand, the Dollar lost ground by week’s end. Market focus now turns to upcoming inflation data, which could determine the Fed’s next move. While rate cut bets are rising, persistent inflation may limit how far the Fed can ease, offering some support to the green-back.
Data supplied by GC Partners