Pound Sterling (GBP)
The British Pound weakened against the Euro and the Dollar following an unexpected 0.3% drop in UK retail sales for December. This decline, which fell short of forecasts, reflected weaker consumer confidence and heightened concerns about the UK’s economic growth prospects. The slowdown in consumer spending underscored persistent financial pressures within the country, leading to a more pessimistic outlook for the Pound as markets responded to the economic challenges facing the UK in 2025.
Euro (EUR)
The Euro gained strength amidst global economic uncertainties. The European Central Bank (ECB) adopted a cautious stance on rate cuts, citing weakening inflationary pressures while signalling gradual policy adjustments. This measured approach bolstered the Euro, with investors focusing on upcoming economic data from the Eurozone. As a result, the Euro maintained its upward momentum as market expectations for the ECB’s policy direction evolved.
U.S. Dollar (USD)
The U.S. Dollar declined after soft inflation data and increased speculation about potential interest rate cuts, ending a six-week streak of gains. Although the U.S. economy demonstrated resilience through robust retail sales and strong job numbers, subdued inflation heightened expectations of monetary easing. Additionally, the Dollar faced downward pressure from global economic factors, including anticipation of policy changes under Trump, leading to its retreat from over two-year highs.