Published: 16/05/2025 By ECAP
Structural Headwinds
The British Pound is consolidating but remains supported by stronger than expected Q1 GDP growth of 0.7% and hopes for improved UK-EU ties ahead of the May 19 summit. However, limited summit outcomes or delays in broader deals could cap gains. Ultimately, risks from global sentiment and trade tensions persist, but steady growth, cautious BoE policy, and easing market volatility suggest limited downside for the Pound’s near-term value.
The Euro is showing resilience, supported by easing U.S. inflation and improved global risk sentiment. Analysts suggest the Euro could strengthen further, with technical indicators showing momentum. Moreover, confidence in the currency is reinforced by signs of diversification into European assets, particularly from international investors. Ultimately, while the Euro remains sensitive to developments in UK-EU relations, overall sentiment continues to favour a stable to stronger outlook for the single currency.
The U.S. Dollar remains under pressure amid soft inflation data and speculation of Fed rate cuts. Moreover, tariff-driven stagflation risks and Trump’s push for a weaker dollar have shaken its haven appeal. Despite a temporary trade truce with China, investor sentiment is cautious. Ultimately, analysts warn structural headwinds persist, with 2025 shaping up as one of the Dollar’s weakest starts since 1973.
Data supplied by GC Partners