The Pound holding firm against EUR and USD

Daily Currency Update

Big investors are trimming their exposure to US markets and increasing allocations to Europe - boosting London flows, especially into UK infrastructure and financials. Despite global uncertainties, the pound remains firm, this is supported by the UK avoiding new U.S. tariffs and fresh UK-EU economic cooperation. Traders are stepping back from the dollar after a brief rally supported by strong jobs data. Global focus has shifted to US-China trade talks in London. With U.S. debt ballooning (thanks partly to tax reforms) investors like Larry Fink are warning about fiscal sustainability, prompting some to rotate out of U.S. assets.

Last Thursday, the European Central Bank delivered a 0.25% rate cut to ease sluggish demand, with President Lagarde, highlighting growth risks tied to trade tensions and voicing a longer-term vision for the euro’s role. However, Eurozone inflation dropped to 1.9%, under the ECB’s 2% target, pointing to a weakening economy and bolstering the case for further policy support.