Weekly Round-Up & The Week Ahead

Weekly round-up and a look at the week ahead for EUR, GBP, and USD.

DAILY ANALYSIS

USD

The Dollar is facing widespread challenges as fears of a US slowdown take their toll. President Donald Trump called for an immediate interest rate cut, criticising Fed Chair Jerome Powell’s approach to “wait and see” the impact of tariffs and inflation. The White House's suggestion of removing Powell sparked concerns about political interference, threatening the Fed’s credibility and investor confidence in the Dollar. At the same time, investors reacted negatively to stalled trade negotiations, as China criticised the US for misusing tariffs and cautioned other nations against entering agreements that could disadvantage them in favour of the US. As a result, the US Dollar Index has been trading at its lowest level since March 2022, trading at -6.39% against the Euro and -3.68% against GBP from last month.

Today at 13:30 GMT, several speeches from Federal Reserve officials are scheduled. Wednesday brings more of the same ahead of the S&P Global Manufacturing PMI - a key gauge of business activity. On Thursday, attention shifts to Durable Goods Orders, reflecting spending on long-term items, alongside Jobless Claims, which are expected to increase from the previous 215k. Friday brings Consumer Sentiment data forecasted to remain steady at 50.8.

GBP

The Pound returns to highs against the Dollar we have not seen since September in the wake of President Trump's political fallouts, crossing the 1.3400 barrier in the earlier hours of the European session. Further support stems from US Vice President JD Vance stating that a trade deal with the UK is likely. He added, "We're working hard with Keir Starmer's government," in an interview with UnHerd. Following softer CPI data from the UK, traders assign an 86% probability (according to the LSEG ) of lower interest rates from the Bank of England during its May meeting - this may place some downward pressure on the currency. During its April meeting, the Bank of England’s Financial Policy Committee (FPC) cautioned that significant changes in global trading could pose a risk to financial stability, dampening economic growth.

GBP/USD trades 3.61% higher than last month. GBP/EUR has come down slightly from the early Asian session, hovering above 1.1600, down 2.69% from last month.

With no data today from the UK, investors will watch out for PMI data on Wednesday before Governor Bailey’s speech in the afternoon. Retail sales expected to decline MoM from March will be published Friday morning.

EUR

The Euro maintains a solid footing against the Dollar, trading 2% higher than last week, near four-year highs, floating around 1.1500 amid weak US sentiment. According to Reuters, to prevent the implementation of President Trump’s proposed tariffs, the EU is exploring adjustments to methane regulations for US gas as part of efforts to advance trade discussions, offering support to the Euro. The European Central Bank’s Survey of Professional Forecasters revealed that inflation in the Eurozone is now expected to be slightly higher at 2.2% this year, up from the 2.1% forecast made three months ago.

Looking at the data, it’s a relatively quiet week for the Eurozone as investors continue to focus on global developments. EUR Consumer Confidence is forecast to decrease from -14.5 to -15.6. Luis De Guindos is the Vice-President of the European Central Bank, speaks at 18:00 GMT. Eurozone PMI will be released tomorrow morning, with more ECB speeches in the afternoon.

Daily Rates

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