Published: 15/12/2025 By ECAP
AT A GLANCE
The British Pound starts the week on the back foot after last Friday’s weak UK GDP data, with attention firmly on the Bank of England decision later this week.
The Euro has been one of the stronger major currencies recently, supported by a steadier economic backdrop and an ECB expected to remain on hold.
The U.S. Dollar begins the week slightly firmer, but focus is on a heavy run of US data that will shape expectations for the months ahead.
POLICY WEEK AHEAD
The British Pound remains under pressure after UK GDP showed the economy contracted by 0.1% ahead of the Budget. Markets are now focused on Thursday’s Bank of England meeting, where a rate cut is widely expected. Ahead of that, UK labour market data and PMI figures on Tuesday, followed by inflation data on Wednesday, will be key. Any further signs of economic weakness could increase expectations of additional easing next year and weigh on the Pound.
The Euro has outperformed over the past week and begins Monday in a relatively strong position. The European Central Bank is expected to keep policy unchanged later this week, with inflation close to target and the economy proving more resilient than feared. PMI data on Tuesday will be watched closely for signs of momentum. If the ECB maintains a confident tone on Thursday, the Euro could remain well supported against both Sterling and the Dollar.
The Dollar is slightly firmer at the start of the week but remains sensitive to expectations around further policy easing. Attention turns to a busy US data calendar, including PMI surveys and retail sales on Tuesday, non-farm payrolls midweek, and inflation figures on Thursday. These releases will be closely watched for confirmation that the labour market is cooling. Any disappointment could renew pressure on the Dollar despite last week’s modest rebound.
Data supplied by GC Partners