After surrendering the gains it made in April and May, the value of the pound has weakened versus the euro. As no significant UK economic data is anticipated this week, the pound actually has no definite direction and is susceptible to changes in the mood of the market as a whole. Furthermore, the recent optimism fuelled by better GDP projections and trade agreements has subsided, leaving Sterling vulnerable to outside pressures and investor profit-taking.
Last week, trade tensions, disappointing German economic statistics, and declining inflation throughout the Eurozone all had an impact on the Euro’s performance. Actually, the euro was originally bolstered by a halt in U.S. tariff measures, but sentiment was negatively impacted by rising German unemployment and declining retail sales. Markets foresee another interest rate decrease as inflation slows, but prospects for additional easing restrict the Euro’s short-term gain potential.
The U.S. Dollar traded slightly lower as uncertainty over tariffs and mixed economic signals weighed on sentiment. In fact, comments from a Federal Reserve official suggesting openness to rate cuts added pressure. Moreover, a temporary return of Trump-era tariffs and weak inflation data further clouded the outlook. Ultimately, investors are closely watching key economic indicators, including inflation and spending figures, for signs of the Fed’s next move.
Need to discuss your exchange rates or market strategies? Get in touch +44 (0)203 865 5780