Pound Sterling (GBP)
The British Pound broadly declined, losing 0.60% against the U.S. Dollar and approaching its July trough against the Euro. The move followed dovish remarks from Bank of England Governor Andrew Bailey, who indicated that further rate cuts may be warranted as inflation eases. Market pricing now reflects expectations for lower UK interest rates, adding pressure on sterling.
Euro (EUR)
The Euro edged lower as German business sentiment weakened, with the IFO index slipping to 87.7 – the lowest since May. In addition, geopolitical risks and investor caution over Trump’s comments on Ukraine weighed on demand. Market focus now turns to ECB President Christine Lagarde’s upcoming speech; a hawkish message could bolster the Euro by suggesting the rate-cut cycle is ending. For now, sentiment remains muted, keeping the currency under modest pressure.
U.S. Dollar (USD)
The U.S. Dollar strengthened midweek, benefiting from safe-haven flows and a cautious tone from Fed Chair Jerome Powell. Powell highlighted persistent risks from both inflation and unemployment, signalling little urgency for additional rate cuts. While markets still anticipate two reductions later this year, his comments were more hawkish than expected.