The Weekly Market Update
News & Insights
w/c 8th December: Geopolitics Permeates
GBP
The British Pound hit a recent high after earlier weakness was caused by poor growth forecasts, budget tensions and potential political upheaval. The Pound has seen some recovery due to upgraded PMI services data alongside gilt stability offering relief. However, some market analysts point to the gains potentially fading as the Bank of England cuts rates, sluggish growth, looming GDP data and a potential for a rise in geopolitical impacts. Overall, the Pound has had recent gains however analysts are split on whether this direction will continue.
EUR
The Euro has had a mixed week of performance with gains earlier in the week but later undermined by geopolitical tensions and inflation data curbing support. Although some economic revisions offered relief, broader weakening investor confidence, geopolitical risks and slow structural reform progress limited the Euros momentum. Overall, with key data sparse and sentiment fragile, many market analysts expect the Euro’s outlook to remain constrained.
USD
The U.S. Dollar continues to be dominated by the market expectation of a Federal Reserve interest rate cut in December and continuing throughout 2026. Furthering this, there are expectations of a more dovish Fed Chairman which has also weighed on sentiment. However, some market analysts have pointed to US economic resilience and sticky inflation which could delay cuts, support yields and attract further capital inflows. There is also a growing factor of geopolitics which may cause safe haven demand. Overall, economic resilience, sticky inflation and geopolitics may help support the dollar despite recent weakness and broader market expectations.
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