Published: 23/05/2025 By ECAP
Cautious Sentiment
The British Pound posted strong weekly gains, rising 1.3% against the Dollar, driven by robust UK retail sales, upbeat inflation and PMI data. April retail sales surged 1.2% month-on-month, with annual growth at 5%, boosting investor confidence. Market expectations for Bank of England rate cuts have eased, lifting UK bond yields and supporting Sterling. However, economic uncertainty and rising bond costs may cap further gains.
The Euro weakened slightly this week, down 0.15% against the Pound and 0.35% against the Dollar, following disappointing Eurozone data. The Composite PMI fell to 49.5 in May, signalling contraction, with services slipping to 48.9. Manufacturing showed a slight improvement at 49.4 but remains below growth levels. Ultimately, uncertainty from trade tensions and soft economic momentum suggest continued stagnation, despite the ECB's efforts to revive growth.
The U.S. Dollar faced a mixed week, pressured by fiscal concerns but buoyed by strong economic data. May’s Composite PMI rose to 52.1, signalling solid growth and easing inflation fears. Despite rising debt and political uncertainty weighing on sentiment, the Dollar found support from robust private sector activity. While near-term data offers relief, long-term outlooks remain cautious as “Sell America” sentiment lingers among investors.
Data supplied by GC Partners