Published: 18/08/2025 By ECAP
At a Glance
The British Pound gained on stronger than expected UK GDP but faces risks from slowing growth, inflation, fiscal concerns and uncertain Bank of England policies.
The Euro faces pressure from weak trade, soft data and Ukraine war uncertainty, with upcoming CPI and PMI key for its outlook.
The U.S. Dollar strengthened on strong U.S. data, reducing Fed easing expectations amid persistent inflation and geopolitical uncertainty from Ukraine talks.
DATA DETERMINES
The Pound found support from stronger than expected UK GDP data, signalling near term resilience. However, analysts caution that slowing growth, inflation pressures and fiscal risks could weigh on it. While delayed rate cut expectations offer short-term backing, questions remain over the Bank of England's strategy. Overall, this coming week’s UK data releases will be critical in shaping the Pound’s direction amid ongoing economic and policy uncertainty.
The Euro remains under pressure due to weak trade conditions, soft economic data, and persistent geopolitical uncertainty, particularly the ongoing war in Ukraine. Markets continue to monitor the conflict, which limits investor confidence and Euro support. Upcoming Eurozone CPI and PMI data will be critical; any signs of weakness could reinforce expectations of ECB rate cuts. Overall, without economic improvement or progress in Ukraine, the Euro’s outlook remains fragile.
The U.S. Dollar strengthened as recent strong U.S. data reduced expectations of aggressive Federal Reserve interest rate easing. Robust producer prices, retail sales, and manufacturing indicators point to persistent inflation and economic resilience, supporting a cautious Fed stance. Overall, market focus remains on the Ukraine talks, with unclear outcomes keeping traders cautious and impacting risk sentiment.
Data supplied by GC Partners