Published: 19/06/2025 By ECAP
Dovish Signals
The British Pound is under pressure amid weak UK economic data, including cooling inflation, slowing GDP, and rising joblessness. While the Bank of England is expected to hold interest rates steady, markets are watching for dovish signals suggesting cuts in August. Moreover, geopolitical tensions and elevated oil prices are also weighing on the Pound, contributing to its recent decline against both the Euro and U.S. Dollar.
The Euro traded mostly flat as inflation data for May showed core inflation falling to 2.3% and headline inflation dropping below the ECB's 2% target to 1.9%. Despite this, the Euro held steady, though markets remain alert to upcoming speeches from ECB officials. Ultimately, any dovish signals or hints at future rate cuts could place downward pressure on the single currency.
The U.S. Dollar strengthened amid heightened geopolitical tensions and the Federal Reserve’s cautious stance on rate cuts. Fed Chair Powell signaled that future cuts depend on economic data, leading markets to scale back expectations. Safe-haven demand also supported the greenback as uncertainty around possible U.S. strikes on Iran grew. Despite bearish sentiment, analysts see near-term dollar strength, with banks advising hedging or tactical shorting based on evolving conditions.
Data supplied by GC Partners