The GBP continues to face downward pressure as markets anticipate a 25 basis point rate cut from the Bank of England, with attention focused on any guidance regarding future policy. Weaker UK services sector performance and rising unemployment are fueling concerns, though persistent inflation and steady consumer spending provide some underlying support. Despite the cautious sentiment toward Sterling, some analysts believe it may be oversold and could stage a modest rebound if the BoE signals a gradual, measured policy path.
The Euro is navigating mixed pressures. A sharp decline in Eurozone investor sentiment largely due to disappointment surrounding the EU/US trade deal has put the currency under strain. However, upcoming economic data could provide a lift. If the Eurozone services PMI indicates expansion and producer price inflation accelerates, it may strengthen expectations of a more hawkish stance from the ECB. Together, these developments could help counter recent softness and offer short term support for the Euro against its major counterparts.
The USD remains under pressure after July’s non-farm payrolls came in below expectations, coupled with significant downward revisions to previous figures fueling speculation of a potential Federal Reserve rate cut in September. However, the USD could regain some ground if the upcoming ISM services PMI points to stronger economic activity. Overall, cautious risk sentiment, ongoing economic uncertainty and shifting Fed policy expectations continue to influence the Dollar’s performance in global markets.
