Pound Sterling (GBP)
GBP:
The Pound had a slightly stronger week following the Autumn Budget, although the market reaction was more relief than optimism. While the Budget did technically provide additional fiscal headroom, many investors and businesses remain sceptical about its longer-term impact. Recent support for Sterling appears to have been driven mainly by the reduction in political uncertainty rather than a shift in confidence about the UK’s economic prospects. The broader outlook remains cautious, with weak growth and productivity trends and continued doubt over whether the Budget will lift business activity or spending. Market focus now turns to UK data releases and Bank of England commentary, which are likely to influence short-term sentiment.
Euro (EUR)
The Euro experienced a steady week, supported more by fluctuations in the US Dollar than improvements in the Eurozone’s own growth indicators. Inflation across the bloc has continued to ease and the ECB’s current pause in policy has contributed to relatively stable trading conditions. However, the economic backdrop remains mixed, with industrial and survey data still signalling sluggish momentum. These factors have limited the scope for stronger moves in the Euro and market positioning has remained cautious. Tomorrow’s core CPI inflation estimates will be closely monitored to assess whether recent stability can continue. ECB President Lagarde is speaking on Wednesday afternoon which will be closely watched by the market.
U.S. Dollar (USD)
The US Dollar softened last week as expectations of a potential policy shift from the Federal Reserve continued to build. Market pricing has reflected the possibility of lower interest rates ahead, and this has contributed to a weaker tone in the US Dollar. At the same time, the US economy is still showing areas of resilience, and upcoming inflation and labour data remain important for understanding the next phase for the Dollar. As a result, the overall trend remains closely tied to economic indicators. Today’s ISM Manufacturing figures will be closely monitored, whilst ISM Services data will be released on Wednesday afternoon. Friday afternoon’s US consumer sentiment and inflation expectation releases remain important too.