Published: 26/06/2025 By ECAP
Increasingly Sceptical
The British Pound faces conflicting pressures. Positive global investor sentiment offers support, but the UK’s worsening fiscal outlook – marked by rising debt, stalled spending cuts, and looming tax increase – poses a serious risk. Markets are increasingly sceptical of the government’s ability to control finances, and while Sterling holds steady for now, renewed attention on fiscal mismanagement could quickly undermine confidence in the Pound.
The Euro traded defensively mid-week, lacking support due to limited data and dovish comments from ECB official Villeroy de Galhau, who hinted at possible interest rate cuts. While risk-on sentiment helped the currency recover earlier losses, gains were modest. Looking forward, a slight improvement in Germany’s GfK consumer confidence index may offer near-term support, but broader Eurozone monetary policy remains a key drag on the Euro’s strength.
The U.S. Dollar slid to a three-year low after President Trump renewed calls for aggressive interest rate cuts and criticized Federal Reserve Chair Jerome Powell. Moreover, a Wall Street Journal report that Trump may name Powell’s successor early further pressured the greenback. Ultimately, markets increasingly expect two Fed rate cuts this year, with September and December seen as likely, despite Powell’s more cautious stance.
Data supplied by GC Partners