Concerns about impending tariffs caused the British pound to lose a lot of ground last week, hitting six-month lows against the dollar. It did, however, rebound following an unanticipated spike in inflation that dampened hopes of a rate decrease by the Bank of England. Despite a small recovery versus the US dollar, the pound was under pressure by the end of the week due to poor UK retail sales and a subdued PMI result.
Following lower-than-expected business confidence indicators throughout the Eurozone, including a steep decline in the French PMI and a drop in Germany’s services sector, the euro was under a lot of pressure on Friday. Additionally, manufacturing in the Eurozone likewise sank farther into the slump. Markets priced in a greater likelihood of the ECB reducing rates in December as a result of the report, which further hurt the euro.
Following eight weeks of gains on Friday, the U.S. dollar eased off recent highs and declined in early European trade this morning. The Dollar Index really dropped 0.5% to 106.950. Notwithstanding this decline, the dollar is probably going to continue to be bolstered by persistent inflationary pressures and the anticipation of rising interest rates in the US over the next several years.
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