Published: 03/01/2024 By ECAPThe British Pound began the new year on the back foot as deepening recession fears and a vulnerable manufacturing sector in the United Kingdom economy have dampened its appeal. Ultimately, the UK’s gloomy outlook may force BoE policymakers to reconsider their stance of keeping interest rates elevated for a longer period.
The Euro struggles to find support as recent data showed that the Eurozone manufacturing sector remained stuck in contraction at the end of 2023. In fact, manufacturing output continued to fall and factory job losses extending into a 7th successive month. Looking forward, investors await Germany’s preliminary Harmonized Index of Consumer Prices for December for further cues on Eurozone inflation.
The U.S. Dollar steadied after a sharp overnight rebound as anticipation of more cues on the Federal Reserve saw markets question expectations for early interest rate cuts. In fact, while the Fed signalled in December that it will begin trimming rates in 2024, it gave scant cues on the timing of the move.
Data supplied by GC Partners