Market comment on behalf of Tito Iakopa – Commercial Director at FlowCommunity
19th February 2025
The British Pound held steady against the US Dollar as market participants assessed the latest economic data and geopolitical developments. UK core inflation rose to 3.7% in January, while headline inflation reached 3.0%, signaling persistent inflationary pressure in the British economy, especially in the services sector. Transport and food sectors were the main inflationary drivers.
As inflation persists, the central bank could be forced to halt its current rate-cut cycle, lending support to the pound. However, weak economic indicators, including the sluggish Services PMI and low Consumer Confidence, add uncertainty to the currency’s outlook.
On a geopolitical front, the ongoing efforts to resolve the conflict between Russia and Ukraine could potentially spark risk-on sentiment, which could provide a bullish short-term outlook for the Pound. Conversely, any setback could dampen investor sentiment, benefiting the US dollar.
Friday’s key economic data, including Consumer Confidence, retail sales and PMI figures, will be the focus of attention. Weak results are likely to increase selling pressure, while strong results should boost the currency.