Daily Spectrum Report

GBP - The pound strengthened after better-than-expected UK labour data which eased concerns over rapid Bank of England rate cuts. Sterling rose as unemployment remained steady and payrolls fell less than expected. However, gains may be short-lived as weak Q2 GDP growth of just 0.1% is forecast which is creating concerns over future tax hikes and slower economic momentum. Overall, Sterling's recent strength may prove temporary amid growing worries over weak UK growth.

EUR - The Euro slightly weakened after new data showed a bigger than expected drop in German investor confidence. This raised worries about Germany's economy slowing down and added pressure on the Euro. However, upcoming German inflation and price data might give the Euro a small boost if numbers are stronger than expected. Overall, investors are broadly cautious due to ongoing US tariff concerns and signs of weakness in Europe's largest economy.

USD - The U.S. Dollar weakened after July's CPI data showed softer than expected headline inflation. This has raised expectations of a Federal Reserve interest rate cut in September, leading to falling bond yields and reduced USD demand. Although there was a slight rise in core inflation. Overall, however, investor sentiment remained dovish reflecting concerns about the economic impact of trade tariffs and anticipation of upcoming US economic reports influencing future policy decisions.

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