Published: 15/08/2025 By ECAP
MARKET HESITANCY
Sterling found support from stronger than expected UK GDP growth of 0.3% in Q2, driven by robust June data. This reinforced expectations that the Bank of England may delay interest rate cuts, supporting Sterling sentiment. However, gains were limited by concerns over potential autumn tax hikes and ongoing global economic uncertainty. Overall, despite positive growth figures, underlying caution in markets kept the Pound’s upside in check.
The Euro remained subdued as markets awaited the Trump-Putin summit in Alaska. With no new Eurozone data, sentiment was shaped by geopolitical uncertainty. A breakthrough in Ukraine peace talks could boost the Euro by easing regional risks. However, stalled negotiations or unfavourable outcomes might weaken it. Fears of strained US-EU relations further dampened confidence, leaving the single currency directionless amid cautious investor sentiment.
The U.S. dollar found support from hotter than expected US producer price index data, which showed inflation picking up more strongly than forecast in July. This reinforced expectations that the Federal Reserve may proceed cautiously with interest rate cuts, supporting USD sentiment. However, gains were tempered as markets still anticipate a cut in September. Overall, growing price pressures kept the dollar broadly supported despite ongoing uncertainty around monetary policy direction.
Data supplied by GC Partners