Published: 29/01/2025 By ECAP

The British Pound has been steadily recovering against the U.S. Dollar since mid-January, gaining 2.8%. This recovery could continue as market conditions improve, despite concerns over U.S. tariffs. However, although the Pound's resilience to potential setbacks suggests that it may continue to rise, risks remain that could limit further gains. Ultimately, continued positive momentum in the market could help the Pound maintain its upward trajectory.

The Euro has been trading in mixed fashion, supported by improved economic activity in the Eurozone. While a rate cut from the European Central Bank is expected, the ECB is likely to maintain a cautious approach due to slow progress on inflation. This could limit further gains in the bloc’s single currency, with the Euro likely to hold its ground if the ECB's stance remains steady.

The U.S. Dollar could face challenges as concerns about U.S. tariffs and a potential slowdown in economic activity weigh on its outlook. While recent data suggests stability, there's a possibility that further rate cuts could be considered. If the Dollar weakens, it could provide opportunities for other currencies, including the British Pound and the Euro, to gain ground against it in the coming weeks.
Data supplied by GC Partners