Published: 25/06/2025 By ECAP
Clouded Outlook
The British Pound strengthened amid easing Middle East tensions and falling oil prices, boosting investor confidence. A ceasefire between Israel and Iran reduced global risk, supporting Sterling. Despite softer UK data and a weakening domestic labour market, Bank of England Governor Andrew Bailey’s commitment to gradual rate cuts helped stabilize expectations. With the outlook for UK interest rates appearing steady, the Pound found renewed upward momentum in global markets.
The Euro faced pressure despite upbeat German Ifo business sentiment data, which rose to 88.4 in June, marking a one-year high. In fact, market optimism following the Israel-Iran ceasefire reduced demand for the safe-haven Euro. Additionally, falling oil prices supported the Eurozone’s import-heavy economy. However, broader risk-on sentiment and looming U.S.-EU trade tensions kept the Euro subdued, with its near-term outlook clouded by external geopolitical and trade-related uncertainties.
The U.S. Dollar weakened following a ceasefire between Israel and Iran, which reduced safe-haven demand and triggered a drop in oil prices. Additionally, Federal Reserve Chair Jerome Powell signalled openness to earlier rate cuts if inflation or the labour market softens. Furthermore, political pressure from President Trump for aggressive rate reductions also raised concerns over Fed independence, amplifying downside risks for the Dollar.
Data supplied by GC Partners