Published: 12/08/2025 By ECAP
Data Dominates
The British Pound held firm. UK labour data showed employment rose by 238K, with unemployment steady at 4.7%, easing fears of a sharper slowdown. While vacancies and payrolls declined, stable wages and limited weakness reduced expectations for Bank of England rate cuts. Overall, anticipation of further data and last week’s hawkish BoE signals continue to support the Pound, despite broader labour market softening..
The Euro has weakened amid growing economic and political pressures. EUR/USD fell as market sentiment soured combined with speculative long positions on the Euro hitting five-week lows. Confidence in the recent US–EU trade deal from some has faded, while expectations for an ECB rate cut are resurfacing following soft inflation signals from Germany and Spain. Overall, geopolitical uncertainty and weak German sentiment continue to weigh on the Euro’s outlook.
The U.S. Dollar is strengthening ahead of key US consumer price index data with core inflation expected to rise. A higher-than-expected inflation could boost the USD and reinforce the Federal Reserve chairman’s hawkish stance, reducing expectations for rate cuts later this year. However, a downside inflation surprise could trigger a sharp decline in the USD. Overall, short term momentum favours the USD, but a potential reversal may follow.
Data supplied by GC Partners