Published: 08/01/2024 By ECAPThe British Pound held onto gains registered against the Euro and the majority of G10 currencies in the first week of 2024, thanks to receding interest rate cut bets. In fact, support for the currency came from a much-watched survey of the UK labour market that showed wage pressures remained elevated heading into year-end, tempering expectations that the Bank of England would imminently cut interest rates.
The Euro see-sawed back and forth last week after European inflation rebounded higher in December, with the Eurozone Harmonized Index of Consumer Prices climbing to 2.9% versus November’s YoY 2.4%. For now, higher inflation of any amount reduces the chances of the ECB cutting interest rates to reduce borrowing and lending costs. Looking forward, the European economic docket will feature Retail Sales for November and business sentiment data for December.
The greenback clocked a strong gain in the first week of 2024, as traders grew uncertain over when the Fed could begin trimming interest rates. In fact, this was exacerbated by a stronger than expected nonfarm payrolls reading on Friday, with strength in the labour market giving the central bank more headroom to keep rates higher for longer.
Data supplied by GC Partners