Last week, the British pound hit a 19-month low versus the euro, but it might bounce back if the UK’s inflation report is good. However, as markets responded to ambiguity around US trade policy and leadership legitimacy, sterling appreciated vs the US dollar. In the end, experts predict that the pound may keep rising in the near future, particularly if forthcoming UK data confirms the BoE’s more hawkish posture.
Amidst US-China trade concerns and a declining US dollar, investors sought safe-haven assets, which caused the Euro to gain strength last week. Germany’s political stability also provided support. The surge might not last long, though, if the ECB expresses a more cautious monetary view and executes the anticipated rate decrease on Thursday. In the end, a growing Euro might be detrimental to the EU, which would force the ECB to modify its policy position.
Concerns over Federal Reserve independence, President Trump’s unpredictable policy changes, and growing trade tensions with China all contributed to last week’s significant decline in the value of the US dollar. Additionally, anticipation about interest rate decreases was exacerbated by a 90-day tariff moratorium and weak inflation figures. Finally, analysts caution that sustained policy uncertainty may accelerate the Dollar’s short-term drop.
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