Pound Sterling (GBP)

The British Pound faced challenges during yesterday’s trading session as the UK’s December services PMI was downgraded, pointing to slower growth in the critical services sector and a troubling drop in employment. This disappointing data heightened concerns about the UK’s economic outlook and fueled speculation that the Bank of England might consider more aggressive interest rate cuts.

Euro (EUR)

The Euro made modest gains, supported by stronger-than-anticipated inflation data from Germany, where the inflation rate climbed from 2.2% to 2.6%. This development could dampen expectations for further interest rate cuts by the European Central Bank. However, the Euro’s advance was limited by weak Eurozone PMI figures, which highlighted ongoing contraction in the private sector, despite some slight improvement in the performance of the services sector.

U.S. Dollar (USD)

The U.S. Dollar stabilized after recovering most of its overnight losses, helped by speculation surrounding U.S. President Trump’s tariff policies. Additionally, the greenback’s recent rally was underpinned by expectations of a slower pace of interest rate reductions by the Federal Reserve in 2025. The dollar index inched higher, as traders awaited key U.S. employment data on Friday to assess the state of the economy and labor market.