Published: 29/09/2025 By ECAP
AT A GLANCE
The British Pound is under pressure as UK political and fiscal uncertainty weighs on sentiment.
The Euro remains stable, with inflation data from major economies likely to guide ECB expectations.
The U.S. Dollar strengthens as markets reassess the likelihood of near-term rate cuts following solid economic data.
REASSESSMENTS
The British Pound is under pressure amid rising UK fiscal risks and political uncertainty. In fact, market concerns are growing over Chancellor Rachel Reeves' resistance to calls for increased public spending. Moreover, investors fear potential breaches of fiscal rules, pushing GBP/EUR lower. Ultimately, with weakening momentum, soft economic sentiment, and diverging central bank policies, analysts expect the Pound to remain vulnerable ahead of November’s budget.
The Euro holds steady ahead of key national inflation data from Germany, France, and Italy, which will shape expectations for the Eurozone-wide release. Forecasts suggest headline inflation will rise to 2.3% and core to 2.4%, reinforcing the European Central Bank’s cautious stance on interest rates. If data exceeds expectations, the Euro could strengthen further, supporting its position against other currencies.
The U.S. Dollar climbed to multi-week highs following Friday’s stronger than expected economic data, including a revised 3.8% GDP growth rate and falling jobless claims. These figures have led markets to scale back expectations for aggressive Federal Reserve rate cuts. While the rally may be stretched, attention now turns to the upcoming PCE inflation data, which could influence the Fed's next steps and determine whether Dollar strength continues.
Data supplied by GC Partners