Published: 21/07/2026 By ECAP
POLITICAL CONFIDENCE
The British Pound recovered after Monday’s losses, supported by the appointment of John Healey as Chancellor, which reassured investors about fiscal credibility. However, uncertainty remains over future borrowing and spending plans. Labour market data pointed to continued weakness but showed early signs of stabilisation, helping support sterling. Better than expected public borrowing figures also provided encouragement, though longer-term fiscal pressures and higher borrowing costs remain key risks.
The Euro made a subdued start to the week after weaker German producer price data suggested inflation pressures are easing. This reduced expectations that policymakers may need to keep tightening policy, limiting support for the single currency. Attention now turns to Germany’s latest economic sentiment survey, with stronger confidence potentially helping to improve demand for the Euro in the near term.
The US Dollar traded in a narrow range, recovering early losses as renewed tensions in the Middle East boosted demand for safer assets. However, hopes that diplomatic talks could prevent the conflict from worsening helped keep market moves limited. Looking ahead, the US Dollar is likely to remain driven by investor confidence, with ongoing geopolitical developments expected to shape demand.
Data supplied by GC Partners