Published: 25/09/2025 By ECAP
SUBDUED SENTIMENT
The British Pound weakened broadly, falling 0.60% against the U.S. Dollar and nearing July lows versus the Euro. The decline followed dovish comments from Bank of England Governor Andrew Bailey, who signalled further interest rate cuts due to easing inflation. In fact, market expectations now price in lower UK rates, which is likely to pressure sterling further. Ultimately, analysts forecast additional weakness for GBP in coming months.
The Euro traded slightly lower amid weak German business sentiment, with the IFO index falling to 87.7 – its worst since May. Moreover, geopolitical uncertainty and cautious market reactions to Trump’s Ukraine comments also dampened demand. Investors now await ECB President Lagarde’s speech; a hawkish tone could support the Euro by signalling the end of rate cuts. Until then, sentiment remains subdued, keeping the Euro under mild pressure.
The U.S. Dollar firmed midweek, supported by safe-haven demand and cautious comments from Fed Chair Jerome Powell. Powell signalled no urgency to cut rates further, citing risks of both inflation and unemployment. Markets still expect two more cuts this year, but Powell’s tone was more hawkish than consensus. Looking forward, stronger upcoming U.S. GDP and durable goods data could further support the Dollar’s near-term strength across major currency pairs.
Data supplied by GC Partners