The GBP edged higher after UK GDP growth for Q1 exceeded expectations, rising 0.7% quarter on quarter compared to the forecasted 0.6%. The stronger than expected data signaled economic resilience, easing pressure on the Bank of England to implement near-term rate cuts. Market sentiment remains cautiously optimistic, with analysts anticipating only modest further rate reductions in 2025, an outlook which continues to support the Pound.
The Euro remained steady during yesterday’s trading session, despite a lack of major economic data as investors looked ahead to upcoming Eurozone releases. Anticipation of stronger Q1 employment figures and improved March industrial production is bolstering market sentiment. If these expectations are met, they would indicate a strengthening economic outlook potentially paving the way for further gains as confidence in the Eurozone recovery builds.
The USD slipped after April’s inflation data came in softer than expected, with core CPI rising just 0.2% month on month. The subdued reading raises the chances of a Federal Reserve rate cut in Q2. However, lingering uncertainty around future inflation, especially from potential tariff impacts is keeping investors cautious. Analysts broadly expect the Fed to adopt a “wait and see” approach, though political pressure for rate cuts may grow if inflation stays muted.
