Published: 27/01/2025 By ECAP

The British Pound is showing signs of a short-term recovery against the U.S. Dollar, supported by reduced concerns over universal tariffs. While the UK faces economic challenges, the recent pessimism around the Pound seems overdone, with market expectations now priced in, helping its recovery. Ultimately, if the Pound continues to strengthen, it could see further gains in the near term.

The Euro strengthened following positive data showing the German economy is recovering, with January's Composite PMI surpassing expectations. This improvement, driven by services and a stabilizing manufacturing sector, signals a potential end to Germany’s recession. Additionally, better than forecast PMI figures from France and the Eurozone further supported the Euro. Ultimately, rising inflationary pressures suggest the ECB may slow rate cuts, which could bolster the Euro against the Dollar and Pound.

The U.S. Dollar faced a significant decline as President Trump stepped back from imposing universal tariffs, reducing market concerns. This weakened the safe-haven appeal of the Dollar and increased expectations of a Federal Reserve rate cuts. Looking forward, with no major U.S. economic data early in the week, the Dollar's movement will depend on future Fed decisions and economic reports.
Data supplied by GC Partners