Published: 27/05/2025 By ECAP
Ongoing Speculation
The British Pound strengthened last week, buoyed by a UK-EU trade agreement expected to boost the economy by £9bn. Moreover, Sterling saw volatility due to mixed Bank of England comments and inflation data, which was driven by one-off factors. Thereafter, gains returned with strong UK services PMI and retail sales. Looking forward, in the absence of major UK data, broader market sentiment will guide GBP movements.
The Euro rose early last week, supported by US Dollar weakness and optimism around a UK-EU trade reset. However, pressure mounted as German producer prices fell, and speculation grew over a potential European Central Bank rate cut. Moreover, a surprise contraction in Eurozone PMIs added further strain. This week, focus turns to Germany’s inflation data, with cooling figures likely increasing pressure on the ECB to lower rates in June.
The U.S. Dollar weakened last week as concerns over rising federal debt and delayed tariff hikes weighed on sentiment. In fact, although stronger than expected US PMI data briefly supported the Greenback, it faced renewed pressure after Donald Trump postponed a planned 50% tariff on EU imports. This week, key data releases, including durable goods orders, GDP, and core PCE inflation, will likely influence USD movement amid ongoing Fed rate cut speculation.
Data supplied by GC Partners