In the European session on Friday, the EUR/USD currency pair maintained its cautious trading stance, hovering around 1.0850. Traders exercised restraint in placing new bets due to ongoing concerns about a German spending deal and persistent US-EU trade tensions. Meanwhile, the GBP/USD pair struggled to gain traction, experiencing pressure towards the 1.2900 mark. This sentiment was influenced by recent data revealing a 0.1% contraction in the UK's Gross Domestic Product for January, alongside a 1.1% decline in Manufacturing Production.
As global markets navigate these developments, US yields experienced a downward shift after reaching a five-day high on Thursday. Investors are closely monitoring US Consumer Sentiment data and tariff-related headlines, which are expected to influence market dynamics further. Amidst these economic indicators, gold achieved a historic milestone by capturing $3,000 for the first time ever. This surge is attributed to US President Trump's stern rhetoric on tariffs, which has buoyed the precious metal's value.
The UK government finds itself in a precarious situation, grappling with spending cuts and the potential for tax increases later this year. The need for higher economic growth has become more urgent, given the recent economic contractions. These factors contribute to the current cautious approach observed in currency trading.
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