GBP – Sterling Strengthens on Trade Optimism and Economic Resilience
The British Pound strengthened last week, buoyed by the announcement of a UK-EU trade agreement expected to boost the UK economy by £9 billion. Sterling experienced volatility midweek due to mixed signals from the Bank of England and inflation data driven by one-off factors. However, gains returned as UK Services PMI and retail sales data came in strong. With no major UK economic releases ahead, broader market sentiment is expected to guide GBP movements this week.
EUR – Euro Pressured Despite Initial Gains
The Euro rose early in the week, supported by a weaker U.S. Dollar and positive sentiment surrounding a UK-EU trade reset. However, downward pressure emerged following a fall in German producer prices and growing speculation of an ECB rate cut. A surprise contraction in Eurozone PMIs further weighed on the currency. This week, attention shifts to Germany’s inflation data, where softer readings may increase pressure on the ECB to act at its June meeting.
USD – Greenback Slips Amid Political and Economic Uncertainty
The U.S. Dollar weakened last week, as rising federal debt concerns and the postponement of planned tariff hikes on EU imports undercut investor confidence. Although stronger-than-expected U.S. PMI data offered brief support, the delay of a proposed 50% tariff by Donald Trump reignited selling pressure. This week’s focus will be on key data releases, including durable goods orders, GDP, and the core PCE inflation index, which could sway markets amid ongoing speculation of Federal Reserve rate cuts.