Key Market Takeaways:

·  Dollar steadies amid policy speculation

The greenback is holding ground as investors assess the potential implications of recent FX-related trade discussions, particularly following the U.S.–South Korea talks.

·   GBP/EUR maintains recent strength

The pound continues to trade at its highest level in a month against the euro, reflecting relative resilience in UK data and ongoing eurozone uncertainty.

Market Recap: Dollar Drifts as Data Disappoints

Mixed momentum for the dollar

U.S. retail sales and producer price index (PPI) figures for April both underperformed expectations, leading to a modest decline in the dollar on Thursday. However, currency markets showed no clear trend as investors continued to digest earlier developments this week.

Tariff-driven volatility lingers

Initial optimism around the mutual U.S.–China tariff reductions gave the dollar a boost at the start of the week. That sentiment was later clouded by speculation that Washington could be exploring ways to weaken the dollar as part of broader trade negotiations—though this has since been dismissed.

Sterling holds firm

The British pound remained relatively strong across the board, buoyed by Thursday’s stronger-than-expected UK GDP data, which added to expectations of economic resilience in Q1.

Today’s Market Update:

With no major economic data scheduled today, markets are heading into the weekend with a subdued tone. Here's what's shaping the current landscape:

🔹 Dollar Consolidation Continues

The U.S. dollar is steady as early-week optimism—sparked by reciprocal tariff reductions between the U.S. and China—has lost momentum.

Uncertainty lingers around U.S. trade policy, particularly speculation that the Trump administration may pursue a weaker dollar strategy, despite repeated denials.

What this means: Markets are in a holding pattern, lacking a clear catalyst. Traders may remain cautious until new developments emerge next week.

🔹 GBP/EUR Hits One-Month High

Sterling has regained ground, with GBP/EUR reaching its highest level in a month.

The pair has recovered much of the ground lost earlier due to geopolitical concerns tied to U.S. trade moves.

What this means: The pound is benefiting from improved sentiment, but future gains may depend on upcoming UK and Eurozone data and developments in global risk appetite.

16th May 2025

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