Pound Sterling (GBP)
GBP: The British Pound stayed fairly stable even though UK jobs data came in weak, with slower wage growth and more unemployment claims. Inflation is still high, but the recent slowdown in core and services inflation has raised expectations that the Bank of England might cut rates later this year. As a result, the outlook for the Pound is more cautious, with little support from current economic trends.
EUR: The Euro gained strength after Germany’s economic confidence index showed an unexpected improvement. While current conditions remain soft, optimism about future growth lifted investor sentiment. Markets also expect the European Central Bank to be nearing the end of its rate-cutting cycle, which has added stability. Overall, the Euro outperformed several major currencies, showing resilience despite global monetary policy changes.
U.S. Dollar (USD)
USD: The U.S. Dollar lost ground as markets anticipate a Federal Reserve rate cut, with weaker jobs data and reduced rate expectations adding pressure. Investors are now betting on a more aggressive cycle of cuts. Still, Capital Economics analysts suggest the downside may be limited. On the upside, factors like AI-driven growth and stubborn inflation could support the Dollar, while risks include a recession, political interference, or steeper Fed cuts than expected.