Pound Sterling (GBP)
The British Pound is under pressure as markets anticipate additional rate cuts from the Bank of England going forward, alongside uncertainty over fiscal policy. Although the Bank left rates unchanged, it suggested inflation is easing, fuelling expectations of further reductions. Combined with a slowing jobs market, and upcoming tax rises, the market will be closely watching Sterling’s performance.
The Euro gained strength as investors turned to safer assets amid global uncertainty and concerns over UK fiscal policy. Its recent rise against sterling was driven largely by sentiment rather than new Eurozone data. Even with falling German producer prices, the currency held firm, supported by the view that the European Central Bank is close to ending its easing cycle—contrasting with the UK’s likely rate cuts, which bolster Euro resilience.
U.S. Dollar (USD)
The U.S. Dollar bounced back after hitting its lowest point in three and a half years. While the Federal Reserve cut rates, it signalled a slower pace of easing than markets had priced in. Fed Chair Jerome Powell highlighted inflation risks and labour market fragility, which helped the dollar recover. Despite dovish expectations, the greenback strengthened as investors recalibrated for fewer cuts ahead, weighing on other currencies and limiting overall dollar weakness.