Published: 13/01/2025 By ECAP
The British Pound edged lower and seems poised to test 2023 lows against the U.S. Dollar. While the currency appears oversold, a significant recovery seems unlikely without a policy shift in the UK. Ultimately, economic stagnation, rising unemployment, and growing debt concerns are weighing on the Pound, with key data releases this week potentially influencing its short-term direction.The Euro has gained substantial ground against the British Pound, benefiting from investor concerns surrounding the UK's economic challenges, including rising debt and inflation. In fact, as UK growth stalls and unemployment increases, the Euro remains resilient. Ultimately, despite potential short-term consolidation for the Pound, the Euro is expected to maintain its relative strength due to the ongoing economic uncertainties in the UK.
The U.S. Dollar strengthened after Friday’s stronger than expected payrolls data boosted expectations of slower interest rate cuts in 2025. This fueled concerns that the Federal Reserve may maintain higher rates for longer. In fact, the Dollar index reached its highest levels in nearly two years. Looking forward, upcoming inflation data and Federal Reserve speeches are expected to provide further insights on future rate decisions.
Data supplied by GC Partners