Published: 21/02/2025 By ECAP
The British Pound strengthened against the Euro and Dollar after strong UK retail sales and a rare financial surplus in January. Retail sales exceeded expectations, boosting market confidence, while reduced expectations for Bank of England rate cuts supported the Pound. Analysts predict short-term strength due to the UK's rate advantage but warn that the Pound's gains may weaken later in the year as the rate advantage narrows.
The Euro remained stable against a basket of currencies amid concerns President Trump's tariff threats, which could put further pressure on the Euro. Additionally, the European Central Bank’s dovish stance and expectations of ongoing rate cuts through mid-2025 may contribute to the Euro's decline. For now, investors are awaiting upcoming PMI data from Germany and the Eurozone, which could impact the Euro’s movement.
The U.S. Dollar retreated from early January highs, with the dollar index falling. This shift came amid comments from President Trump about potential trade agreements with China, though his threat to impose tariffs on various imports tempered the Dollar's losses. Furthermore, the Dollar also received support from the Federal Reserve’s hawkish stance on monetary policy, despite the broader market uncertainty.
Data supplied by GC Partners