Published: 22/12/2025 By ECAP
AT A GLANCE
The British Pound begins the week holding recent gains despite signs the UK economy has lost momentum. Attention is on how long this resilience can last as markets head into the Christmas break.
The Euro remains supported after the ECB signalled confidence in the Eurozone outlook and an end to its easing cycle.
The U.S. Dollar Dollar is softer following recent policy easing, with holiday-thinned trading likely to dominate into year-end.
Year-End Calm
The British Pound is holding firm despite evidence that UK growth has stalled. Third-quarter GDP showed only modest expansion and October data confirmed a contraction, highlighting a clear loss of momentum. Even so, the Pound has remained resilient since last week’s Bank of England decision, helped by the absence of fresh domestic shocks. With little UK data scheduled and Christmas approaching, sterling may remain supported in quiet conditions.
The Euro starts the week on a steady footing after the European Central Bank signalled it is comfortable with its current policy stance. Recent upgrades to growth and inflation forecasts have improved confidence in the Eurozone outlook. With markets winding down for the holidays and no major Eurozone releases due, the Euro is likely to trade calmly, supported by reduced expectations for further policy changes.
The U.S. Dollar remains soft following recent policy easing by the Federal Reserve. With markets now largely focused on 2026 and little fresh US data scheduled this week, trading conditions are expected to be quiet. The upcoming Christmas and New Year bank holidays are likely to limit volatility, leaving the Dollar driven more by seasonal flows than fundamental developments in the days ahead.
Data supplied by GC Partners