Published: 17/10/2025 By ECAP
REAFFIRMED FRAGILITY
The British Pound remained relatively steady this week despite data confirming the UK’s sluggish economic recovery. August GDP rose by just 0.1%, matching expectations, while July's figure was revised lower. This reaffirmed the fragility of the UK’s economy, but the absence of surprises helped Sterling avoid further losses. With limited domestic data releases, the Pound's short-term direction will hinge on Bank of England commentary and broader global sentiment.
The Euro saw modest gains this week, supported by expectations of persistent inflation within the Eurozone and relative political stability in France. However, weak trade balance data, with the surplus plummeting from €12.7 billion to €1 billion, cast a shadow on the currency’s momentum. Markets are closely watching upcoming CPI figures, with higher-than-expected inflation potentially deterring early ECB rate cuts and offering the Euro a possible boost heading into year-end.
The U.S. Dollar weakened following dovish remarks from Federal Reserve Chair Jerome Powell, who signalled openness to interest rate cuts amid labour market concerns. Market sentiment turned risk-on, favouring assets like the Pound and Euro over the safe-haven Dollar. With investors now pricing in two rate cuts by year-end and further easing in 2026, USD has lost momentum. Despite prior gains, a shift in Fed tone has undercut near-term Dollar strength.
Data supplied by GC Partners