Published: 26/05/2026 By ECAP
CALMING POLITICS?
The British Pound recovered strongly last week as political tensions in the UK eased and confidence improved around the government’s stability. Investors were encouraged by calmer financial markets and reduced uncertainty surrounding Prime Minister Keir Starmer. The British Pound held firm despite weaker UK data on jobs, inflation, business activity and retail sales, as markets focused more on political developments and the possibility that rising energy costs could keep pressure on prices.
The US Dollar traded cautiously as investors lacked fresh economic data to guide market sentiment. Ongoing uncertainty surrounding geopolitical tensions in the Middle East provided some support for the safe-haven currency, although mixed risk appetite limited stronger gains. Attention is now focused on upcoming US consumer confidence figures, while developments in global tensions could continue influencing demand for the Dollar and shape market sentiment in the near term.
The US Dollar strengthened after inflation data came in stronger than expected, reinforcing expectations that interest rates could stay higher for longer. Persistent price pressures linked to housing and energy kept markets cautious despite easing tensions in the Middle East. While improved trade discussions between the United States and China lifted sentiment slightly, uncertainty remains. Investors are now focused on upcoming economic data and central bank comments, with currency market volatility expected to stay elevated.
Data supplied by GC Partners