Pound Sterling (GBP)

Sterling started the week on the front foot after UK inflation figures showed that price pressures continue to ease. While inflation remains above the Bank of England's long-term target, the latest data gave investors confidence that the UK economy is moving in the right direction. As a result, the Pound initially strengthened against both the Euro and the US Dollar.

However, sentiment shifted later in the week as investors became more cautious ahead of next week's Bank of England interest rate decision. Global uncertainty, including concerns around international trade and ongoing geopolitical tensions, also encouraged investors to move money into safer assets such as the US Dollar. This caused Sterling to lose some of its earlier gains, leaving the week relatively balanced overall.

What to watch this week

The Bank of England's interest rate announcement will be the main focus for Sterling. While rates are widely expected to remain unchanged, markets will be listening carefully for any hints about whether a rate cut could come later this year. Investors will also keep an eye on UK business activity data and consumer confidence, both of which will provide a clearer picture of how the economy is performing.

🇪🇺 Euro (EUR)

The Euro traded within a relatively narrow range for much of the week as investors weighed mixed economic data from across the Eurozone. Inflation continues to move closer to the European Central Bank's target, but concerns remain over weak economic growth in some of the region's largest economies, particularly Germany and France.

Despite these concerns, the Euro remained resilient against Sterling as markets took a cautious approach ahead of several key economic releases. Investors also kept a close eye on developments in global trade and energy markets, both of which continue to influence confidence across Europe.

What to watch this week

It's a busy week for the Euro, with Eurozone inflation figures and GDP data both due for release. These reports will help determine whether the European Central Bank is likely to keep interest rates steady or begin considering further policy changes later in the year. Any surprises could lead to increased volatility for EUR/GBP and EUR/USD exchange rates.

🇺🇸 US Dollar (USD)

The US Dollar remained one of the strongest major currencies last week as investors continued to favour it during periods of uncertainty. Ongoing geopolitical tensions and cautious market sentiment increased demand for the Dollar, which is widely regarded as a safe-haven currency during times of global uncertainty.

Economic data from the United States also continued to paint a picture of a resilient economy. Although inflation has eased significantly from previous highs, employment and consumer spending remain relatively strong. This has reduced expectations of any immediate interest rate cuts from the Federal Reserve, providing further support for the Dollar throughout the week.

What to watch this week

Attention now turns to the Federal Reserve's latest interest rate decision. While markets expect rates to remain unchanged, investors will be looking for any guidance on when policymakers may begin reducing rates. Alongside the Fed meeting, upcoming US jobs data and manufacturing figures will also be closely watched, as stronger-than-expected results could provide additional support for the Dollar.

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