The British Pound held steady last week, with UK interest rates remaining unchanged at 4.5%. GBPUSD has benefited from ongoing US Dollar weakness, though further gains may depend on both domestic data and external developments.
Against the Euro, Sterling found a degree of stability. However, the outlook remains fragile amid concerns over the pace of progress in securing a UK–US trade deal. Continued market volatility could weigh further on GBPEUR in the near term.
Looking ahead, attention turns to Flash UK PMI data due on Wednesday. The figures are expected to offer important clues on the direction of the UK economy and may influence the Pound’s next move.
The Euro continues to find some support amid ongoing uncertainty in the US. EURUSD has edged higher recently, buoyed in part by diminished confidence in the US Dollar.
This week, markets are focused on Eurozone Flash PMI releases, which will be closely scrutinised for signs of economic strength or stagnation across the region. Positive surprises could provide fresh support for the Euro.
ECB President Christine Lagarde is also scheduled to speak on Tuesday. Her remarks will follow last week’s ECB decision to lower the main interest rate to 2.25%, and markets will be looking for further insights into the central bank’s outlook and policy intentions.
The US Dollar came under broad selling pressure last week, alongside declines in US Bonds and Equities. Investor sentiment was hit by renewed tensions between President Trump and Federal Reserve Chair Jerome Powell, raising concerns about potential political influence over monetary policy.
In addition to domestic challenges, trade remains a focal point. The Cato Institute recently noted that meaningful trade agreements typically require around 18 months to finalise. Despite the administration’s 90-day timeline, markets remain sceptical that such deals can be achieved without significant compromise. Fears of a return to reciprocal tariffs are resurfacing.
With central bank communication, trade negotiations, and PMI data in focus, the coming week is set to provide fresh direction for the major currency pairs. Market participants will be closely monitoring macroeconomic signals and political headlines for signs of momentum—or further volatility. As ever, staying agile in response to shifting fundamentals will be key in navigating the evolving FX landscape.
Market Report by Skye Caffyn Baptie
