Published: 21/01/2025 By ECAP
The British Pound is expected to weaken further as markets foresee interest rate cuts from the Bank of England, possibly starting in February. In fact, rising unemployment and cooling wage growth suggest the BoE will ease policy to combat inflation. Ultimately, this dovish outlook points to a potential reduction in inflationary pressures, weighing on the Pound.The Euro held strong against most currencies despite Germany's disappointing producer price index for December. The PPI fell unexpectedly from 0.5% to -0.1%. However, this unexpected decline in PPI did not significantly impact the Euro. Looking ahead, the Euro may face pressure if Germany's ZEW economic sentiment index shows a decline, potentially undermining investor confidence and weighing on the currency as markets react to weaker economic sentiment.
The U.S. Dollar strengthened following Donald Trump's tariff remarks, signalling potential tariffs on all imports starting February 1. His comments created market volatility, with the Dollar Index rising 0.7%. In fact, anticipation of new tariffs boosted the Dollar as markets braced for inflationary effects and a possible extended period of high U.S. interest rates, pressuring regional currencies.
Data supplied by GC Partners