Published: 10/01/2024 By ECAPThe British Pound entered the new week with strong impetus and two key events could further prompt gains against the Dollar and Euro. This first event comes as early as this afternoon where BoE governor Andrew Bailey will appear before a parliamentary committee. The second event will be Friday's UK GDP release which could confirm whether the economy picked up some momentum at the end of 2023.
The Euro was further pressured by dismal German data released yesterday which showed that Industrial Production plunged by 0.7% in November as compared to a 0.3% rise anticipated. This increases the odds of a recession in Europe’s largest economy and bets for a 25-basis points rate cut by the European Central Bank in April.
The U.S. Dollar was steady this morning ahead of U.S. inflation data later this week that could influence the Federal Reserve's policy. For now, sticky inflation, coupled with recent signs of strength in the labour market, give the Fed more headroom to keep rates higher for longer. While the central bank is expected to eventually cut interest rates this year, markets have grown increasingly doubtful over whether rate cuts will come by as soon as March.
Data supplied by GC Partners