Published: 17/09/2025 By ECAP
FUTURE GROWTH
The British Pound held steady despite underwhelming UK labour market data, including slower wage growth and rising unemployment claims. Inflation remained well above the Bank of England’s target, but a cooling in core and services inflation has increased speculation about a potential interest rate cut later this year. This has introduced a more cautious outlook for the Pound, with limited support from current economic indicators.
The Euro advanced as investor sentiment improved following a stronger than expected rise in Germany’s economic confidence index. Despite weaker current conditions, optimism about future growth helped support the currency. Moreover, markets expect the European Central Bank to be near the end of its easing cycle, reinforcing stability in the Euro. Ultimately, broader strength was seen as the Euro outperformed several major peers, reflecting resilience amid global monetary policy shifts.
The U.S. Dollar weakened ahead of the Federal Reserve’s expected rate cut, pressured by softer labour data and falling rate expectations. In fact, markets now price in a more aggressive easing cycle. However, analysts at Capital Economics believe further downside is limited. Ultimately, upside risks include AI-driven growth and persistent inflation, while downside risks stem from potential recession, political interference, or deeper than expected Fed cuts.
Data supplied by GC Partners