Sterling's Shaky Dance Against Major Currencies

Sterling increased against the U.S. dollar but hit a six-week low against the euro due to weak economic data from both the U.S. and UK. Investors showed a preference for safe-haven assets amid concerns over the U.S.-China trade deal. UK economic challenges persisted with ongoing declines in output, orders, and jobs.

Sterling surged against the U.S. dollar on Thursday, yet traded at a six-week low versus the euro driven by frail economic indicators from both sides of the Atlantic. The euro achieved its highest level in close to four years against the dollar as investors flocked to safe-haven assets amid looming U.S.-China trade uncertainties.

Despite a less severe decline than feared in British manufacturing for May, economic woes persisted, with output, orders, and employment continuing to retract due to recent tax increases and tariffs imposed by U.S. President Donald Trump. The UK economy confronts significant challenges, underscored by weaker labor market data, stirring speculation on potential Bank of England interest rate cuts.

British Finance Minister Rachel Reeves's strategies had a muted impact on markets as economists anticipated further tax hikes. The Bank of England, while expected to maintain its rates, faces growing pressure from money markets pricing in imminent rate reductions, with the pound's future hanging amid fiscal uncertainties.

(With inputs from agencies.)