Published: 16/09/2025 By ECAP
DOVISH EXPECTATIONS
The British Pound advanced as strong wage growth and a steady unemployment rate signalled potential resilience in the UK labour market. Despite modest job losses, signs of stabilization supported sentiment toward Sterling. The Pound also gained from a risk-on market mood, which favoured risk-sensitive currencies. Looking forward, investors are watching upcoming UK inflation and retail data closely, which could influence Sterling’s performance later in the week.
The Euro weakened amid continuous political instability in France and a broader risk-on market mood that reduced demand for safe-haven assets. Investor sentiment toward the Euro also soured ahead of Germany’s ZEW economic sentiment index, expected to show a sharp decline. Ultimately, with no major economic drivers, the Euro underperformed against several peers, remaining vulnerable to external pressures and softer confidence across the Eurozone.
The U.S. Dollar weakened as markets widely anticipate the Federal Reserve will resume rate cuts, starting with a 25-basis point move this week. In fact, dovish expectations are reinforced by signs of a slowing labour market and soft consumer sentiment. However, despite a risk-on mood pressuring the safe-haven currency, further USD losses may be limited as much of the Fed’s easing cycle is already priced in by investors.
Data supplied by GC Partners