Published: 16/12/2024 By ECAP
The British Pound faces a volatile week, impacted by disappointing UK GDP growth and concerns over flatlining economic conditions. After last week's selloff, GBP/EUR and GBP/USD have both retreated. This week’s data, including the PMI, labor market report, CPI, and Bank of England interest rate decision, will be crucial for the Pound. Disappointing data could lead to more rate cuts, further pressuring Sterling, while strong results could help stabilize it.The Euro faces downside risks today, with French, German, and eurozone December flash PMIs expected to remain in contraction. However, political uncertainty in Germany, where Chancellor Scholz's government faces a no-confidence vote, may lead to fiscal stimulus, supporting the Euro in 2025. Looking forward, ECB speakers, particularly hawkish officials, could influence the Euro if they push back against expectations for lower rates.
The U.S. Dollar strengthened last week, driven by positive inflation and PPI data, with inflation reaching a four-month high. Despite a quiet end to the week with no significant data on Friday, the greenback remained firm. Moving forward, the upcoming Federal Reserve interest rate decision is expected to be a key driver, with any unexpected changes in policy potentially creating significant volatility for the Dollar.
Data supplied by GC Partners