Published: 19/08/2025 By ECAP
DOES PEACE BECKON?
The British Pound firmed at the start of the week, supported by improved market sentiment and expectations of a slight rise in UK inflation. With no major UK data released, Sterling was influenced by risk appetite, holding steady amid broader market movements. Anticipation of July’s CPI report, which is forecast to rise, may offer the Pound further support due to persistent inflation reducing the likelihood of near-term Bank of England rate cuts.
The Euro weakened early in the week as risk sentiment reduced demand for its safe-haven status. Geopolitical uncertainty around Ukraine peace talks added pressure. With no fresh Eurozone data and inflation steady, speculation about future ECB rate cuts may rise. Falling European gas prices provide some support, but overall caution persists, limiting the Euro’s strength amid ongoing market uncertainty and geopolitical risks.
The U.S. Dollar struggled for direction early in the week amid cautious optimism about potential Russia-Ukraine peace talks. Safe haven currency demand eased as hopes for progress grew following high-level meetings. The market awaits the Federal Reserve’s Jackson Hole symposium for clearer signals on monetary policy. Overall, any indication of a softer Fed stance could keep the USD under pressure in the coming days.
Data supplied by GC Partners