Published: 12/06/2025 By ECAP
Growth & Sustainability
The British Pound fell sharply after this morning’s disappointing UK GDP data showed a 0.3% contraction in April. In fact, concerns are mounting over how the Labour government's £190BN spending plan will be funded, given record-high taxes and surging debt interest costs. Moreover, weak manufacturing, worsening trade balance, and declining employment add to fears of a fiscal crisis. Ultimately, markets doubt the Pound amid questions over economic growth and sustainability.
The Euro is strengthening as investors shift away from the Dollar and British Pound amid rising U.S. trade tensions and UK fiscal concerns. With President Trump escalating tariff threats and the UK facing weak data and heavy spending plans, the Euro is seen as a safe haven. Ultimately, EUR/USD is nearing 2025 highs, while EUR/GBP gains as the Euro benefits from relative economic and political stability in the Eurozone.
The U.S. Dollar fell as softer than expected inflation data increased expectations of Federal Reserve rate cuts. In fact, monthly and core CPI both undershot forecasts, triggering a broad selloff. Moreover, President Trump’s trade stance with China raised concerns as tariff uncertainties persist. Ultimately, markets fear tariff-driven inflation may harm the economy without influencing Fed policy, creating a lose-lose scenario that continues to weigh on the Dollar in the short term.
Data supplied by GC Partners