Published: 24/02/2025 By ECAP
The British Pound saw mixed performance last week as stronger than expected inflation and wage growth data were released. However, the Pound's movement was subdued, with markets focusing on the Bank of England's likely interest rate cuts in May. Although some volatility persisted, concerns about potential tax hikes and economic growth continued to influence the Pound, with the Bank of England's monetary policy path playing a key role in shaping investor sentiment.
The Euro continues to face challenges, with diminishing optimism about peace talks in Ukraine and concerns over the ECB’s ability to meet its inflation target. In fact, weak Eurozone PMI data added pressure, along with concerns about Europe's role in the US-Russia-Ukraine discussions. While the Euro initially rose against its peers, political uncertainty in Germany and economic data may influence its performance, limiting further gains and possibly leading to ECB rate cut expectations.
The U.S. Dollar dropped following weaker than expected economic data, including a slowdown in business activity and a drop in consumer sentiment. In fact, the Dollar Index declined by 0.4%, as concerns about political instability and U.S. trade policies weighed on the currency. This softening of the Dollar fuelled speculation about a potential economic slowdown in the U.S. and raised questions regarding the future direction of Federal Reserve policy.
Data supplied by GC Partners